Regulators Take Steps to Reduce Hidden Costs of Public Funds and Securities Trading Commissions
The Shenzhen Securities Regulatory Bureau recently issued a notice to securities and fund companies in the jurisdiction, outlining requirements for the reform of the public offering fund industry’s fee rate. The notice, which aims to reduce the hidden costs associated with public funds, marks the first explicit request from regulators to address this issue.
According to the notice, passive stock fund products are now prohibited from using securities trading commissions to pay for research and consulting services. Additionally, transaction commissions for all types of fund products must not exceed the market average commission rate level. However, other fund products are allowed to pay a certain percentage through securities trading commissions, as long as the transaction commission rate does not exceed twice the market average commission rate level.
This move by the Shenzhen Securities Regulatory Bureau highlights the need for transparency and fair pricing within the public offering fund industry. By reducing hidden fees, investors will have a clearer understanding of the true costs associated with their investments. This will ultimately promote confidence and trust in the market.
The notice also calls for improvements in the transaction commission distribution system. Specifically, it aims to further decrease the upper limit of the transaction commission distribution ratio of fund managers within a single securities company. This change is expected to address concerns regarding potential conflicts of interest and ensure a fair distribution of commissions among fund managers.
Overall, these regulatory measures are aimed at protecting the interests of investors and promoting a more efficient and transparent securities market. By reducing the hidden costs of public funds and securities trading commissions, the Shenzhen Securities Regulatory Bureau is taking a step towards creating a fairer and more accessible investment environment for all.