China's securities regulator has unveiled draft regulations aimed at cutting sales-related fees for public offering funds, marking the third and final phase of a multi-year fee reform initiative designed to lower costs for investors and support long-term market engagement.

The China Securities Regulatory Commission (CSRC) released the draft rules on Friday, inviting public consultation. The regulations address key fee categories, including subscription and redemption fees, sales service charges, and customer maintenance fees. Notably, the draft caps subscription fees for equity, mixed, and bond funds at 0.8%, 0.5%, and 0.3% respectively, and reduces annual sales service fee limits for equity/mixed funds to 0.4%, index/bond funds to 0.2%, and money market funds to 0.15%. Redemption fees will now be fully incorporated into fund assets, with a simplified tiered structure encouraging long-term investment.

According to industry estimates, the third phase of the reform will generate approximately CNY 30 billion (USD 4.2 billion) in annual savings, contributing to a cumulative reduction of over CNY 50 billion annually since the initiative began in 2023. This builds on earlier phases that lowered management and custody fees as well as trading commissions for both active and passive funds.

The regulations also emphasize enhanced service for individual investors. Maintenance fees linked to personal client holdings are capped at 50% of fund management fees, while fees for institutional clients are set lower, reflecting a broader push to promote equity fund growth and encourage investment discipline. Additionally, the CSRC supports the operation of a Fund Investor Service Platform (FISP), which consolidates institutional direct-sales channels, standardizes processes, and improves efficiency and risk management across the industry.

Industry responses highlight that the reforms shift the focus from scale to investor returns, incentivizing fund managers to enhance product innovation, investment management, and customer service capabilities. Experts also note that fee reductions may boost participation in equity funds, strengthen the resilience of China's A-share market, and foster a more investor-centric public funds ecosystem.

As the reforms enter their final stage, analysts view this as a key milestone in China's efforts to promote high-quality development of its public fund sector, creating tangible benefits for investors while encouraging sustainable growth in the asset management industry.