China proposes cut to transaction fees on funds to boost market

CHINA’S financial regulator has proposed cutting the commission rate for public funds, the latest measure to spur more trading and bolster the market as the world’s second-biggest economy faces a raft of headwinds.

The China Securities Regulatory Commission (CSRC) is seeking public opinion on the proposal to “reasonably” reduce transaction fees, and plans to strengthen supervision of the distribution of commissions for securities trading of public funds, according to a statement from the regulator late on Friday (Dec 8).

China’s economy has faced a series of challenges this year, most notably a downturn in the property sector, with various measures of support failing to spark a turnaround. The Politburo – made up the nation’s top leaders – has pledged to strengthen the government’s fiscal measures.

The CSRC said commission fees for passive equity funds managed by fund managers should not exceed the market average stock trading commission rate calculated by the Securities Association of China. Public funds that fail to meet the requirement should lower the rate within three months, it said.

The regulator also asked mutual funds to lower the concentration of transaction fees distributed to a single brokerage. Large public funds should not allocate over 15 per cent of the funds’ annual fees to one brokerage firm, while the proposed cap for smaller funds is set at 30 per cent.

In two separate statements on Friday, CSRC also pledged to strengthen support for state-owned entities’ green bond issuance, as well as ramp up supervision on private investment funds. It proposed to raise the paid up amount of individual private equity and venture capital funds to 3 million yuan (S$562,285), from 1 million yuan to refine the standards of qualified investors. BLOOMBERG