With a view to implementing the requirement of Chairman Guo Shuqing for promoting fund management companies to accelerate the transition to modern wealth management institutions and supporting them to develop fund products meeting risk return demands of different investors in a market-oriented and customer-centered approach, the Shanghai Securities Exchange (SSE) has recently published and implemented the "SSE Guidelines for Development and Innovation of Fund Products" after having solicited opinions from fund companies for several times. The guidelines will ease a restriction on the development of only one ETF product for one index.
The Guidelines defines basic requirements and procedures for fund companies developing SSE-listed regular and innovative products to encourage and support them in product development and business innovation.
Loosening Restriction on Index Products
In order to improve the efficiency of using index resources and embody the open and market-oriented principles, the Guidelines will ease the current restriction on the development of only one ETF product for one index. Besides, to avoid decentralized liquidity arising from excessive ETF products for the same index, the SSE will organize industry experts to make a comprehensive assessment on the scheme of fund companies applying for the same index in accordance with the unified deployment of the China Securities Regulatory Commission (CSRC) and the market demand. The Guidelines specifies the assessment criteria that through open and fair competitions, fund companies with rich experience in the operation of index products and adequate preparation for business & technologies will be prioritized for the conferment of license for product development in a bid to promote the orderly competition in the industry and the overall growth of the market scale.
Improving Services for Innovation on Fund Products
The Guidelines also ushers in an expert assessment mechanism to provide fund companies with consultation and evaluation services for business innovation. According to the Guidelines, the SSE will give support for fund companies' development of innovative products on the basis of the unified and standard procedures and under the overall arrangement of the CSRC. Regarding the market division of labor for innovation on fund products, the SSE aims to improve the services for the innovation on fund products, provide a functionally rich platform for business technologies and an open and fair environment for competition, lift the restrictions on innovative fund business and give full play to the active role of market participants.
As for the great innovations in the industry, the SSE will, according to the relevant requirements of the CSRC and the prudent and risk-controllable principles, support certain well-prepared companies to launch a pilot program for them and then make them fully open to the market after the operation is mature.
Progress in Appraisal on Fund Products Available Online
To enhance the openness of information and improve the transparency of business operation in the market, the SSE will regularly publish and update relevant information on its website, such as application for development of fund products, acceptance of application, issuance of no-dissent letter and use of index resources, so that fund companies are able to timely acquire the information related to the development of fund products. On this basis, the SSE will further develop and enrich the application functions of the column "Funds" on its website for providing fund companies with information support for business development and daily operation.
Based on the Guidelines, the SSE will actively collect opinions and suggestions from fund companies and other market participants, further rationalize business procedures, keep enhancing the openness and transparency of services for the development of SSE-listed fund products, improve the services and promote the sound and rapid development of the fund market.
FTSE Mondo Visione Exchanges Index:
Shanghai Stock Exchange Releases "Guidelines For Development And Innovation Of Fund Products"
Date 08/08/2012