China Securities Depository and Clearing Corporation Limited decided on April 28 to reduce the transfer fee of stock trading by 50% as of April 29. The measure aims to thoroughly implement the spirit of the special meeting of the financial commission of the State Council, promote the stable and healthy operation of the capital market, further stimulate market vitality and increase support for the real economy by reducing investor costs.
Many interviewees told the China Securities Journal that the reduction of stock transaction transfer fee reflects the management’s caring attitude towards the capital market and is conducive to improving the market trading desire and market trading volume.
improve transaction activity
According to the introduction of China Clearing, the transfer fee for stock trading is charged by the current A-shares in Shanghai and Shenzhen market according to the transaction amount of 0.02 ‰, and the A-shares in Beijing market and the shares of listed companies according to the transaction amount of 0.025 ‰, which is uniformly reduced to 0.01 ‰.
Stock transaction transfer fee refers to the fee paid by the buyer and the seller for the change of equity registration after the transaction of stocks entrusted for trading, which shall be directly collected by the exchange and deducted by non securities dealers.
A broker in East China said that reducing the stock transaction transfer fee is conducive to reducing the transaction cost of investors, improving the market trading desire and market trading volume, boosting market sentiment and enhancing the vitality of the capital market.
Will the reduction of stock transaction transfer fee affect the business of securities companies, especially the income of brokerage business China Galaxy Securities Co.Ltd(601881) securities investment consultant Miao Ze told reporters that for budget conscious investors, after noting the reduction of stock transaction transfer fee, securities companies may be required to reduce commissions, which may lead to the decline of commission income of securities companies. However, for securities companies, the improvement of investors’ trading activity may lead to a significant increase in trading volume, so as to improve the overall income of securities companies.
Four times in the coming ten years
Prior to this reduction, China Clearing has reduced the stock trading transfer fee at least three times since 2012.
In April 2012, China Clearing announced that from June 1, 2012, the transfer fee charged for A-share transactions in Shanghai market will be reduced from 0.5 ‰ of the transaction face value to 0.375 ‰ of the transaction face value; The current charging standard of A-share transaction transfer fee in Shenzhen market is 0.0255 ‰ of the transaction volume, which remains unchanged.
In August 2012, China Clearing announced that from September 1, 2012, the A-share transaction transfer fee charged to investors of both parties in the Shanghai market will be reduced by 20%, from 0.375 ‰ of the transaction face value to 0.3 ‰ of the transaction face value. The transfer fee for A-share trading in Shanghai market collected and retained by securities companies will be reduced by 20% in the same proportion. The transfer fee for A-share trading in Shenzhen market is still charged at 0.0255 ‰ of the trading volume and remains unchanged.
In July 2015, CSDCC announced that in order to further reduce the transaction cost of investors, from August 1, 2015, the transfer fee of A-share transaction will be charged to the investors of the buyer and the seller respectively according to the transaction face value of 0.3 ‰ in Shanghai and 0.0255 ‰ in Shenzhen, and will be uniformly adjusted to be charged to the investors of the buyer and the seller respectively according to the transaction amount of 0.02 ‰. The transaction transfer fee is China’s settlement fee and shall not be retained by the securities operating institution.
release positive policy signals
In addition to directly reducing the transaction costs of investors, most respondents are more optimistic about the policy signals it brings to the market.
Yang Delong, chief economist of Qianhai open source fund, believes that the measure reflects the management’s caring attitude towards the capital market. “Recently, there have been a lot of favorable policies, from promoting consumption and reducing the reserve requirement to reducing the transfer fee of stock trading, which has released the management’s caring attitude towards the capital market and is conducive to the recovery of market confidence. For investors, it is very important to maintain a good attitude at the bottom of the market, adhere to value investment and grasp the most beneficial direction of economic transformation.”
Tian Lihui, Dean of the Institute of financial development of Nankai University, believes that a significant reduction in transaction costs can significantly improve market liquidity. “With sufficient market liquidity, the market is easier to get out of the trough and obtain efficiency.”
Miao Ze said that with the positive effects of various policies, including the reduction of stock trading transfer fee, the market is expected to enter a state of recovery.
