New stock regulations to cut transaction costs

China's top securities regulator is planning to launch a slew of policies and regulations to reduce securities transaction costs and attract additional capital to stabilize the market and shore up investor confidence.

The China Securities Regulatory Commission is expected to cut securities transaction commissions by 20 percent before Sept 1, an official from the commission said at a news conference on Friday.

That would be the third cut in securities transaction costs this year.

On June 1, the Shanghai and Shenzhen stock exchanges lowered the transaction costs of A shares by 25 percent, and cut the transaction commissions of futures products by 30 percent.

A week ago, the National Development and Reform Commission and the Ministry of Finance jointly announced that the CSRC would reduce securities trading regulation fees from 0.04 percent of the annual transaction value to 0.02 percent, while removing the regulation fees for securities investment funds and bonds.

"It's very important to improve the efficiency of capital markets by reducing costs," said Fu Peng, the chief macroeconomic consultant of Galaxy Futures Co Ltd.

As the lower fees may help enlarge the market size in the following months, the total income from the transactions is not likely to decrease, Fu said.

"The CRSC will boost cooperation with the China Insurance Regulatory Commission and improve the securities institutions' services for insurance funds," the CSRC official said.

Three packages of regulations for insurers' investments in the capital market are under study, and are expected to be released for public consultation soon. The packages may include rules for investing in securities, equities and property, according to the CSRC.

Chinese stock markets hit their lowest levels in half a year on Wednesday after the benchmark Shanghai Composite Index tumbled more than 1 percent to 2,138.79 points in the afternoon session.

Earlier this month, the National Bureau of Statistics said that the country's GDP growth was 7.6 percent in the second quarter, the lowest figure in three years.

"The weaker profitability of Chinese listed companies has depressed investor confidence and added pressure to capital markets," said Tang Yi, general manager of Edmond de Rothschild Asset Management (Hong Kong) Ltd Co.

He said the market may rebound slightly in the second half due to a stronger economic outlook.

Meanwhile, the CSRC said it will encourage staff members and high-level managers to hold shares of their own companies. However, those stock trades should avoid sensitive periods, such as before the release of quarterly reports, and regulation will be enhanced to prevent insider trading.

This year, the top regulator has pushed the reform of the IPO issuing system and curbed speculation on the purchase of new shares.

"The market-oriented reform will continue with improved supervision, to protect the investors' interests and boost the market," said the CSRC official.

chenjia1@chinadaily.com.cn