CSRC to ease requirements for funds to encourage product innovation

To further invigorate the capital market and boost investor confidence, continued efforts will be made to advance reform on the investment side, enhance listed companies' appeal to investors and further optimize the equity trading mechanism, the China Securities Regulatory Commission, the country's top securities watchdog, said on Friday.

Equity-based funds should pursue high growth, which will help accelerate reform at the investment end, the CSRC said in an announcement on its official website. Registration requirements for index-based funds, it said, will be relaxed to encourage product innovation.

Leading mutual fund companies should increase the issuance of equity-based products. The limits on mutual funds' investment in stock index options and stock index futures will be relaxed, the CSRC assured.

More medium — to long-term capital should be introduced in the A-share market to increase the ratio of equity investment, the CSRC said. The national social security fund, basic pension fund and annuity fund will be supported to expand their capital market investment scope.

The rules for identifying strategic investors will be optimized so that medium — to long-term capital, such as investments by the national social security fund, can back non-public offerings of listed companies.

Efforts should be made to promote the pilot program for insurance funds' long-term investment in stocks. Commercial banks' wealth management funds should improve their capabilities in equity investment, the CSRC said.

Listed companies should increase their appeal to investors. A "green channel" should be set up for the listing, bond issuance and restructuring of technology companies making key breakthroughs.

Share repurchase or buyback conditions should be relaxed while valuation methods for asset-light technology companies' restructuring plans should be improved, the CSRC said.

It also said that the trading mechanism of the A-share market will be further optimized, by way of reduction of transaction fees, cuts to commission rates charged by securities brokerages and study of the possibility of extending the trading hours of stock and bond markets.

Following the CSRC announcement, the Shanghai and Shenzhen bourses said late on Friday that the transaction fees for A-share and B-share securities at the two exchanges will be lowered by 30 percent. The Beijing Stock Exchange, which lowered transaction fees by 50 percent to 0.025 percent in December 2022, also announced on Friday a further reduction of the fees to 0.0125 percent of the transaction's worth. The adjustments will take effect on Aug 28.

Investors in China have been seeking a reduction in stamp duty. In response, the CSRC said on Friday that past experiences showed such a cut will help lower trading costs and boost market activity.

On the heated discussions among investors on the implementation of T+0 trading, the CSRC said the time is not ripe for introducing such a mechanism in the A-share market now, for it would not be conducive to fair trading and may aggravate retail investors' disadvantageous position.

The normalization of IPOs and refinancing will be carried on while a balance will be struck between the primary and secondary markets, the CSRC said.