Who will monitor the fund's day-to-day operations when the failed bank as the trustee/custodian can no longer perform its duties?
As a general rule, a trustee may not retire except upon the appointment of a new trustee and subject to the prior approval of the SFC. The retirement of the trustee should take effect at the same time as the new trustee takes up office.
Where an appointed trustee is no longer capable of carrying out its duties, the fund manager is obligated to decide whether to suspend/terminate the service provided by the affected trustee and replace the affected trustee with another trustee to safe-keep fund assets. The fund manager will need to inform the SFC of any decision to replace the trustee and the SFC will closely monitor the situation to ensure that investors' interests are protected.
Will the trading of a fund be suspended or deferred due to the bank, the trustee/custodian of an authorised fund, faces crisis? Will it be initiated by the SFC or the fund manager?
It is up to the fund managers and trustees to decide whether to suspend or defer dealing of a fund having regard to the interests of investors and the circumstances of the fund. It may not be necessary for the funds to be suspended if, for example, there is the ability to value the underlying assets of the fund fairly or there is adequate liquidity to meet the redemption demand. The primary concern for the SFC is whether a decision to suspend dealing would be in the interests of investors.
The SFC has never initiated suspension of dealings and is not in a position to do so. However, it will closely monitor a suspension or deferral of dealings of a fund. Under certain circumstances, the fund manager and/or trustee may need to justify why a fund is or is not suspended.