China will lower the commission for stock trading from a rigid 0.35 percent to a flexible maximum of 0.3 percent, starting from May 1. The new commission will apply to both yuan-denominated A shares and foreign currency-denominated B shares.
Under the new arrangement, brokers could decide their own commission level and register with relevant authorities.
The announcement by the China Securities Regulatory Commission (CSRC) and other relevant authorities was widely hailed as good news for the market, which has been in depression for months.
Financial analysts pointed out that individual investors will be the biggest beneficiary of the lower and flexible commission, as big institutional investors have been enjoying actual commission discounts for a long time.
The move, however, is certainly a blow to brokers, especially those minor ones that have been drawn to the sector in recent years by the industry's easy money, said Xiao Jianjun, an analyst with the Guoxin Securities Co, Wang Fenghua, an analyst with the Aviation Securities Company, said the new commission system will force brokers to seek new profit sources such as consultation services.
The CSRC's announcement said prices for such new services could be negotiated by brokers and their clients.
(eastday.com April 9, 2002)
