Home » Financial Insight丨The second phase of public fund rate reform measures have all been implemented, and the industry’s comprehensive rate has been steadily reduced-Xinhuanet Client

Financial Insight丨The second phase of public fund rate reform measures have all been implemented, and the industry’s comprehensive rate has been steadily reduced-Xinhuanet Client

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The second phase of public fund rate reform measures have all been implemented, and the industry’s comprehensive rate has been steadily reduced

On April 19, the China Securities Regulatory Commission announced the official implementation of the “Regulations on the Management of Securities Transaction Fees for Publicly Offered Securities Investment Funds” starting from July 1, 2024. This marks the successful implementation of the second phase of fee rate reform in the public fund industry, leading to a continuous decline in the industry’s comprehensive fee rate. It is estimated that the first two stages of fee rate reform measures could save investors approximately 20 billion yuan in cumulative costs each year.

According to the recent State Council’s “Several Opinions on Strengthening Supervision, Preventing Risks and Promoting High-Quality Development of the Capital Market,” the government aims to steadily reduce the comprehensive fee rate of the public fund industry. The China Securities Regulatory Commission has also emphasized the importance of reforming fee rates in the industry to achieve this goal.

The newly implemented regulations prioritize investors’ interests by adjusting commission rates for public fund stock transactions to a more reasonable level. They have also established a dynamic adjustment mechanism for commission rates to keep them in line with market-wide rates. Additionally, the regulations aim to strengthen supervision of commission distribution behavior and prevent the transfer of benefits within the industry.

The three-step reform of public fund fee rates is steadily moving forward, with the first phase focusing on reducing management fees and custody fees for active equity products. The second phase involves reducing transaction commission rates and enhancing supervision, with the regulations issued recently playing a crucial role in this phase. The third stage will focus on standardizing fees in fund sales and implementing other supporting reforms by the end of 2024.

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Overall, the rate reform in the public fund industry is expected to create a positive development environment. It will lower investment costs for investors, encourage professionalism and characteristics development in securities companies, and promote the transformation of wealth management practices. By implementing these reforms, the public fund industry aims to improve long-term returns for investors, reduce transaction costs, and enhance the overall industry development ecology.

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