The China Securities Regulatory Commission has issued an “Action Plan for Promoting High-Quality Development of Publicly Offered Funds”, setting out a package of reforms to shift the sector away from scale-driven growth toward investor-return outcomes, while expanding equity investment capacity and tightening governance, risk controls and enforcement. Key measures include promoting performance-benchmark-based floating management fees for newly established actively managed equity funds, with fee tiers determined by investors’ holding-period performance versus the benchmark. Over one year, leading managers are to be guided to ensure such products account for no less than 60% of their actively managed equity fund launches, followed by an evaluation after a one-year trial and gradual wider rollout. The plan also calls for a regulatory guideline on performance benchmarks, revised disclosure templates that highlight medium- to long-term performance, benchmark comparisons, investor profit and loss, turnover and all-in fees, and new rules to reduce subscription/purchase fees and sales service fees, alongside encouragement to lower management and custody fees for large index and money market funds. Fund company performance assessment and pay frameworks are to be reset around investor outcomes, including minimum weightings of 50% for investment-return indicators in senior management assessments and 80% for fund managers, with three-year-plus performance accounting for at least 80% of long-horizon assessment. On market development and supervision, the CSRC will increase the weight of equity-fund metrics in supervisory classification assessments, support new product structures including additional floating-fee models, issue guidance on public funds’ derivatives use, and introduce faster registration timelines including completion within five business days for stock exchange-traded funds, 10 business days for actively managed equity funds and certain off-exchange broad-based equity index funds, and 15 business days for hybrid and bond funds that commit to minimum equity holdings. Further steps span a sales-institution classification evaluation mechanism, revisions to fund company governance standards and industry rating rules, new operational guidance for using swap facilities and revised risk reserve fund arrangements, and a push for stronger legal and enforcement tools including advancing amendments to the Securities Investment Fund Law and tightening shareholder and senior management entry requirements.

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