Notice on Issuing the Action Plan for Promoting the High-Quality Development of Publicly Offered Funds

June 1, 2025

CSRC Document No. [2025] 21

To all CSRC local offices, exchanges, subordinate units, associations, and internal departments and bureaus:

The "Action Plan for Promoting High-Quality Development of Public Offering Funds" is hereby issued to you. Please earnestly implement it.

China Securities Regulatory Commission May 7, 2025

Action Plan for Promoting High-Quality Development of Public Offering Funds

In recent years, China's public offering fund industry has played a positive role in serving the real economy and national strategies, promoting the reform, development, and stability of the capital market, and meeting residents' wealth management needs. However, issues have also been exposed, such as deviations in business philosophy, insufficient functional performance, imbalanced development structure, and weak investor satisfaction. To accelerate the industry's transition towards high-quality development, this action plan is formulated.

I. Overall Requirements

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implement the decisions and deployments of the Third Plenary Session of the 20th CPC Central Committee, the Central Economic Work Conference, the Central Financial Work Conference, the September 26, 2024, meeting of the Political Bureau of the CPC Central Committee, and the new "National Nine Articles" regarding "steadily advancing public offering fund reform, promoting the high-quality development of securities and fund institutions, and supporting medium- and long-term capital entry into the market." This plan primarily embodies the following basic principles: Adhere to the Party's comprehensive leadership over financial work, unswervingly follow the path of financial development with Chinese characteristics, and build a public offering fund industry that aligns with the essential requirements of Chinese modernization. Adhere to the main line of strengthening regulation, preventing risks, and promoting high-quality development, correct the industry's development orientation, and achieve an organic unity of functionality and profitability. Adhere to a problem-oriented and goal-oriented approach, effectively respond to market concerns, introduce a series of policy measures that investors can tangibly feel and access, and address prominent issues in industry development and regulatory systems and mechanisms. Adhere to an investor-centric approach, urge industry institutions to firmly establish a business philosophy centered on investors' best interests, and integrate it throughout the entire chain and all aspects of fund operation and management, including corporate governance, product issuance, investment operations, and assessment mechanisms. Uphold the fiduciary duty of "accepting entrustment and serving faithfully," and achieve a transformation from prioritizing scale to prioritizing investor returns. Adhere to the direction of marketization and rule of law, draw on mature international experience, explore and establish a new industry development model suited to China's national and market conditions. Strive to solidly promote the implementation and effectiveness of various policy measures within about three years, forming an "inflection point" for the industry's high-quality development.

II. Optimize Fund Operation Models, Establish and Improve Mechanisms Linking Fund Company Revenue and Compensation to Investor Returns

  1. Establish a performance-linked floating management fee mechanism. Vigorously promote a floating management fee model based on performance benchmarks for newly established actively managed equity funds. For investors meeting certain holding period requirements, determine the applicable management fee rate level based on the product's performance during their holding period. If the product's actual performance meets the performance benchmark for the same period, the base rate applies. If it is significantly below the benchmark, a lower rate applies. If it significantly exceeds the benchmark, a higher rate applies. Within the next year, guide leading industry institutions with top-tier management scale to issue such funds, with the number constituting no less than 60% of their actively managed equity fund issuances. After a one-year pilot, conduct a timely evaluation, optimize and improve the mechanism, and gradually roll it out comprehensively.
  2. Strengthen the binding role of performance benchmarks. Formulate regulatory guidelines for public offering fund performance benchmarks, clarifying the mechanisms for setting, modifying, disclosing, ongoing evaluation, and correction of fund product performance benchmarks. Implement strict supervision on fund companies' selection and use of performance benchmarks to effectively leverage their role in defining product positioning, clarifying investment strategies, characterizing investment styles, measuring product performance, and constraining investment behavior.
  3. Enhance transparency. Revise disclosure templates for actively managed equity funds, strengthen the disclosure of fund product performance and tiered management fee information. Comprehensively present information such as medium- and long-term product performance, comparison with performance benchmarks, investor profit/loss status, turnover rate, product total expense ratio level, and actual management fees collected by the manager. Improve the readability, simplicity, and relevance of information disclosure.
  4. Steadily reduce costs for fund investors. Issue the "Regulations on Public Offering Fund Sales Fees," reasonably lowering subscription fees and sales service fees for public offering funds. Guide industry institutions to appropriately reduce management fees and custody fees for large-scale index funds and money market funds. Promote the reduction of related fixed costs such as fund registration and settlement, index licensing, information disclosure, auditing, and legal services.

III. Improve Industry Assessment and Evaluation Systems, Comprehensively Strengthen Long-Cycle Assessment and Incentive-Restraint Mechanisms

  1. Reform fund company performance assessment mechanisms. Issue regulations on fund company performance assessment management, requiring fund companies to comprehensively establish an assessment system centered on fund investment returns, appropriately reducing the weight of operational indicators such as scale ranking and revenue/profit. Fund investment return indicators should cover both fund product performance and investor profit/loss status. The former includes indicators like fund net value growth rate and comparison with performance benchmarks; the latter includes indicators like fund profit rate and the proportion of profitable investors. For the assessment of company executives by fund company shareholders and boards of directors, the weight of fund investment return indicators should be no less than 50%. For the assessment of fund managers, the weight of fund product performance indicators should be no less than 80%. Implement a comprehensive long-cycle assessment mechanism for fund investment returns, where the weight of medium- and long-term returns over three years should be no less than 80%.
  2. Strengthen the guiding role of regulatory classification and evaluation. Incorporate investor profit/loss and its proportion, comparison with performance benchmarks, the proportion of equity funds, and investment research capability evaluation into the fund company evaluation index system. Increase the bonus points for indicators such as medium- and long-term performance over three years, the scale of self-investment in their own equity funds, stability of investment behavior, and growth scale of equity investment by 50% on the existing basis. The combined scoring weight of the aforementioned indicators under the "ability to serve investors" category should be no less than 80%.
  3. Reshape the industry evaluation and award ecosystem. Revise the "Interim Measures for the Administration of Public Offering Fund Evaluation Business" and related self-regulatory rules. Construct an evaluation and award system centered on long-cycle performance over five years or more. Optimize fund evaluation and award indicators, increase the weight of indicators related to investor profit/loss and comparison with performance benchmarks, and eliminate unreasonable evaluation and award activities oriented towards short-term performance rankings. Strengthen regulatory enforcement, enhance the professionalism and independence of evaluations and awards, promote the exit of unqualified evaluation and award institutions, and crack down on unlicensed institutions conducting evaluation and award activities illegally.
  4. Urge the industry to strengthen compensation management. Improve the compensation management system for securities and fund operating institutions, urging fund companies to establish and improve compensation management mechanisms linked to fund investment returns. Strengthen mandatory co-investment ratio and lock-up period requirements for fund companies, executives, and fund managers. Strictly implement the deferred payment system for performance-based compensation of fund company executives and key personnel. Recover and deduct compensation from personnel responsible for serious violations of laws and regulations according to law. For fund managers whose product performance over three years is more than 10 percentage points below the performance benchmark, their performance-based compensation should be significantly reduced. For fund managers whose product performance over three years significantly exceeds the performance benchmark, their performance-based compensation may be reasonably and appropriately increased.

IV. Vigorously Increase the Scale and Proportion of Public Offering Fund Equity Investments, Promote Industry Functionality

  1. Strengthen regulatory guidance and institutional supply. Significantly increase the weight of equity fund-related indicators in the regulatory classification and evaluation of fund companies, highlight the development orientation towards equity funds, and strengthen the application of classification evaluation results according to law. Formulate guidelines for public offering funds' participation in financial derivatives investment to better meet the needs of public offering funds in strengthening risk management, stabilizing investment behavior, and enriching investment strategies.
  2. Promote innovation and development of equity fund products. Actively support the innovation and development of actively managed equity funds, research and launch more floating fee fund products linked to fund performance, investor returns, and encouraging long-term holding. Vigorously develop various on-exchange and off-exchange index funds, continuously enrich thematic investment stock index funds aligned with national strategies and development directions. Research and create pilot products for off-exchange broad-based index funds specifically designed to participate in swap facility operations.
  3. Optimize registration arrangements for equity funds. Implement a fast-track registration mechanism for stock exchange-traded funds (ETFs), in principle completing registration within 5 working days from acceptance. For actively managed equity funds and mature off-exchange broad-based stock index funds, in principle complete registration within 10 working days from acceptance. For hybrid funds and bond funds with clearly specified minimum equity holding ratio requirements, in principle complete registration within 15 working days from acceptance.
  4. Establish a classification and evaluation mechanism for fund sales institutions. Incorporate indicators such as the scale and proportion of equity fund assets under custody, the scale and proportion of initial offering products under custody, investor profit/loss and holding periods, and the scale of regular investment business into the evaluation index system. Give priority consideration in product access, license applications, and innovative business to fund sales institutions with top classification evaluation results according to law. Urge fund sales institutions to improve their internal assessment and incentive mechanisms, increasing the weight of investor profit/loss status in assessments.

V. Promote High-Quality Development of the Industry, Accelerate the Construction of First-Class Investment Institutions

  1. Improve fund company governance. Revise the "Governance Guidelines for Securities Investment Fund Management Companies," fully leverage the role of major state-owned shareholders in the corporate governance structure, and promote the diligent performance of duties by boards of directors and management. Reform and optimize the selection and appointment mechanism for independent directors of fund companies, enhance the professionalism and independence of their duties, and better play their supervisory role. Prevent improper intervention by major shareholders and insider control.
  2. Strengthen the development of core investment research capabilities. Establish an investment research capability evaluation index system for fund companies, guide fund companies to continuously strengthen resource investment in human capital and systems, accelerate the construction of a "platform-based, integrated, multi-strategy" investment research system, support the team-based management model for fund managers, and expand and strengthen investment research teams. Encourage fund companies to increase research and application of emerging technologies such as artificial intelligence and big data. Support eligible fund companies in establishing technology and operational service subsidiaries. Support fund companies in implementing long-term incentive measures such as employee stock ownership plans according to law to enhance the stability of core teams.
  3. Enhance the level of service to investors. Actively promote fund companies to focus on improving their service capabilities for various types of medium- and long-term capital, research and create fund products more suitable for personal pension investments. Officially launch the industry's institutional investor direct sales service platform, providing institutional investors with centralized, standardized, and automated "one-stop" data and information exchange services for investing in public offering funds. Issue the "Measures for the Administration of Securities Fund Investment Advisory Business" and the "Regulations on Public Offering Securities Investment Fund Investment Advisory Business" to promote the standardized development of fund investment advisory business.
  4. Support the coordinated development of various fund products. Revise the "Measures for the Operation and Management of Public Offering Funds," improve and optimize the establishment standards, survival conditions, and exit mechanisms for public offering funds, further refine product classification standards, orderly expand the investment scope and strategies of public offering funds, and enhance the operational flexibility of public offering funds. Increase efforts in creating products with equity exposure and low-to-medium volatility, as well as asset allocation products. Revise and improve product rules for funds of funds (FOFs) and pension target funds to meet the needs of investors with different risk preferences and promote the coordinated development of equity investment and fixed-income investment.
  5. Optimize the industry development landscape. Support the business innovation and development of high-quality leading fund companies, promoting the dual enhancement of asset management and comprehensive wealth management capabilities. Formulate a demonstration plan for the high-quality development of small and medium-sized fund companies, supporting specialized operations and differentiated development. Issue the "Measures for the Administration of Public Offering Fund Operational Service Business," promote the reduction of information technology system leasing and usage fees, and help industry institutions reduce costs and increase efficiency. Support fund companies in market-oriented mergers and acquisitions, and promote the orderly exit of severely non-compliant institutions according to law.
  6. Consolidate the cultural foundation of the industry. Establish and improve an evaluation system for industry culture building, conduct regular assessment and feedback, and increase publicity and promotion of positive examples. Improve self-regulatory codes of conduct for practitioners, and better leverage the role of industry self-regulation and supervision. Conduct regular on-site inspections for integrity in business practices, strengthen the comprehensive governance of the "revolving door" between government and business in the industry, and vigorously promote and practice the "Five Dos and Five Don'ts" financial culture with Chinese characteristics.

VI. Guard the Risk Bottom Line, Enhance the Inherent Stability of Industry Development

  1. Improve the multi-layered industry liquidity risk prevention and control mechanism. Issue operational guidelines for public offering funds' participation in swap facility business, clarifying the business norms for public offering funds to address liquidity risks through swap facility operations. Revise the "Supervisory Measures for Public Offering Fund Risk Reserves," optimize the industry's risk reserve management system, reasonably set and dynamically adjust the provisioning ratio based on fund companies' classification evaluation results and risk profiles, and research expanding the investment scope and permitted uses of risk reserves.
  2. Strengthen guidance for long-term investment behavior of funds. Establish a regular counter-cyclical adjustment mechanism, dynamically adjusting the pace and progress of product registration based on market conditions. Strengthen the registration supervision of thematic funds, issue self-regulatory rules for supervising the investment style of thematic funds, and enhance the monitoring, analysis, and tracking of fund investment transactions. Supervise fund companies to improve their new share pricing decision-making mechanisms, promoting reasonable and prudent pricing. Reasonably constrain the number and scale of products managed by a single fund manager, and strengthen the monitoring and risk warnings for the concentration of holdings of fund managers with large management scales. Issue rules for public offering funds' participation in corporate governance of listed companies, helping to improve the quality of listed companies.
  3. Continuously improve the compliance level of the industry. Revise the "Guidelines for Fund Managers Concurrently Serving as Investment Managers of Private Asset Management Plans," raising the requirements for the concurrent roles of public and private fund managers and business risk isolation. Strengthen supervision over fund companies providing external investment advisory services. Continue to steadily advance the cleanup of quasi-channel businesses. Strictly and severely investigate and punish violations such as leaking dividend information, assisting in tax avoidance, and providing improper benefits in sales processes. Urge fund companies to strengthen internal management and increase accountability.
  4. Improve the industry's reputation management and expectation guidance capabilities. Urge fund companies to improve their reputation risk management mechanisms, strengthen public opinion monitoring and response, and promptly respond to false information and sensitive public opinion. Resolutely implement the decisions and deployments of the Party Central Committee, promote a positive economic outlook, and do a good job in interpreting policies and guiding public opinion in the fields of macroeconomics, social livelihood, and the capital market, fully leveraging the industry's positive role in guiding and shaping expectations. Support fund companies in actively safeguarding their rights, making good use of legal and administrative regulatory means, and jointly combating acts such as fabricating and spreading false information and extortion.

VII. Strengthen Regulatory Enforcement, Making "Teeth and Thorns" a Reality

  1. Further increase legal and regulatory supply. Promote the revision of the "Securities Investment Fund Law of the People's Republic of China," strengthen institutional supply in key areas such as fund company shareholder equity, corporate governance, fund operations, personnel management, and market exit, enrich regulatory enforcement tools, and significantly increase the cost of violations. Promote stronger coordination between administrative law enforcement and criminal justice, and strictly crack down on serious illegal and criminal activities such as trading on non-public information, insider trading, and market manipulation.
  2. Strictly enforce equity and executive access requirements for industry institutions. Strictly control the access of fund companies and fund sales institutions, strengthen the review of shareholder qualifications, continuously enhance the look-through verification of the equity structure and source of funds of investing entities, and severely crack down on violations such as nominee shareholding, private transfer of equity, and investing with non-owned funds. Expedite the issuance of the "Measures for the Administration of Securities Investment Fund Custody Business," raising the access threshold for custodian institutions. Improve the management system for the appointment of fund company executives, raise the requirements for their performance of duties, include executives who violate laws and regulations into integrity records according to law, and apply relevant industry ban requirements.
  3. Strengthen the enforcement of laws, regulations, and systems. Establish an industry best practice sharing mechanism, and increase the publicity of enforcement standards and typical cases. Increase the intensity of cross-jurisdictional inspections, strengthen the use of technical means, and enhance the ability to identify problems. Adhere to targeting major and serious violations, coordinate the use of administrative penalties, administrative regulatory measures, and self-regulatory measures to achieve strictness in an orderly and effective manner. Steadily disclose the administrative regulatory measures taken against fund companies and practitioners. Establish a mechanism for issuing warnings and conducting education on serious violations of laws and regulations.