China eases burdens on brokerages
24 August 2012
News, Asia, China
China has reduced mandated contributions by brokerages to an investor protection fund by 30% to 50%, according to a report from the Global Times on Wednesday (August 22).
Chinese brokerages continue to struggle in an environment that has seen major Chinese stock indices give up all of their gains for the year, causing the trading volumes that generate fees for the brokerages to decline.
The investor protection fund was originally set up to serve as a pool to refund stock investors incase their brokerage went bankrupt.
Securities companies in China were previously required to pay 0.5 – 5% of their operating revenue to the China Securities Investor Protection Fund (SIPF). In order to reduce the brokers’ operating costs, SIPF has considerably reduced their payment by 30-50%. Based on preliminary estimations, the average reduction for all securities brokers will be almost 40%.
The move is intended to boost the performance of Chinese equities markets, which look set to close their third consecutive year in negative territory.
China's securities regulator said in early August it would cut stock and futures trading fees from September 1, which would save investors about 600 million yuan (US$95.2 million) in A-share trading fees by the end of the year.
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