CITIC Construction Investment: What are the changes in the official draft of the new public offering regulations?

The Zhitong Finance App learned that CITIC Construction Investment released a research report stating that on December 31, 2025, the Securities Regulatory Commission revised and issued the “Regulations on the Management of Sales Expenses of Publicly Raised Securities Investment Funds”. The “Regulations” consist of 6 chapters and 29 articles. The purpose is to implement the “Action Plan to Promote the High-Quality Development of Public Funds”, further reduce investment costs for fund investors, standardize the order of the public fund sales market, and protect the legitimate rights and interests of fund investors. Compared with the request for comments previously issued on September 5, the official draft further clarifies subscription rate limits for active shares and index funds, relaxes punitive redemption fee requirements for debt-based and personally held index funds, adds provisions prohibiting exclusive arrangements for fund products on sales channels, and extending the rectification period to 12 months.

CITIC Construction Investment's main views are as follows:

On December 31, 2025, the Securities Regulatory Commission revised and issued the “Regulations on the Administration of Sales Expenses of Publicly Raised Securities Investment Funds”

On December 31, 2025, the Securities Regulatory Commission revised and issued the “Regulations on the Administration of Sales Expenses of Publicly Raised Securities Investment Funds”. Compared with the request for comments previously issued on September 5, the official draft further clarifies the upper limit of subscription rates for active shares and index funds, relaxes punitive repayment requirements for debt-based and personally held index funds, adds additional provisions prohibiting exclusive arrangements for fund products in sales channels, and extending the rectification period to 12 months. The remaining provisions have not changed much.

Focus on several key changes in the official draft of the new regulations compared to those solicited for comments:

Change 1: Clarify the maximum purchase rate requirements for active partial equity funds and index funds. In the consultation, equity funds, hybrid funds, and bond funds stipulated upper purchase rate limits of 0.8%, 0.5%, and 0.3%, respectively. In the official draft, it is specifically stated that active partial equity funds recognize the upper limit of the purchase rate of 0.8%, the upper limit of the purchase rate for other types of hybrid funds is 0.5%, and the upper limit of the approved (subscription) rate is 0.3% for index funds and bond funds.

Change 2: Relaxation of punitive redemption fee requirements for bond funds and index funds held by individuals. In the consultation for comments, bond funds were juxtaposed with other types of funds, requiring that punitive redemption fees must be charged according to a uniform tiered rate (holding <1.5% for 7 days, no less than 1% for 7-30 days, and not less than 0.5% for 30 days to 6 months). Managers are allowed to separately agree on redemption fee standards for only a few categories such as ETFs, interbank deposit funds, and money market funds.

In the official draft, special exemptions have been added for bond funds and personally held index funds. On the basis of retaining the aforementioned uniform tiered rate, fund managers are allowed to separately agree on redemption fee collection standards for two types of situations: 1) individual investors hold shares of index funds and bond funds for 7 days; and 2) institutional investors hold shares of bond funds for 30 days or more.

What is worth exploring is how Class C shares will be handled in the future? The redemption fee arrangements for different share categories (such as Class C shares) were not clearly differentiated in the comments and official draft of the new regulations. Class C shares are generally exempt from subscription fees, daily sales and service fees, and no redemption fees for 30 days or more. However, the new regulations uniformly require holding for less than six months to charge a redemption fee of not less than 0.5%, which may have a certain impact on the tactical allocation behavior of institutional investors such as insurance, bank financial planners, FOF, and fund investment.

Change 3: New provisions have been added to clearly prohibit discriminatory and exclusive arrangements for fund products on sales channels. In the consultation for comments, the main restrictions were on setting exclusive shares and imposing differential rates to unfairly treat different investors in the same fund; however, the new regulations were further strengthened, requiring fund managers to reasonably select sales institutions based on product characteristics, and clearly prohibit the implementation of discriminatory, exclusive, and binding sales arrangements through the establishment of exclusive fund products by specific fund sales agencies.

Change 4: Effective January 1, 2026, the adjustment period for stock products has been extended to 12 months. In the consultation, for funds that do not require system transformation, it is necessary to complete the revision and announcement of legal documents such as contracts and recruitment instructions within 6 months; funds that require system transformation and legal document revisions are completed within 12 months. In the official draft, it is first specified that the implementation date is January 1, 2026, and the unified adjustment period is 12 months. All funds that have been sold but do not meet the regulations must be adjusted within 12 months from the date of implementation (January 1, 2026).

Let's take a summary

The “Regulations on the Administration of Sales Expenses of Publicly Raised Securities Investment Funds”, as the third stage of the public offering rate reform, responds to the new “National Nine Rules” decisions and arrangements on “steadily advancing public fund reform, promoting the high-quality development of securities fund institutions, and supporting the entry of medium- to long-term capital into the market”, and the core spirit of the “Action Plan to Promote the High-Quality Development of Public Funds” introduced on May 7, 2005. The new regulations consist of 6 chapters and 29 articles, which closely follow the investor-based core, urge industry institutions to firmly establish a business philosophy centered on the best interests of investors, and run through the entire chain and all aspects of fund operation and management, such as corporate governance, product distribution, investment operation, and assessment mechanisms, to abide by the fiduciary obligation of “being trusted by others and loyal to others” to achieve the transformation from large-scale to investor-focused returns. The regulation promotes various aspects such as lowering subscription rates, optimizing redemption fee arrangements, reducing sales and service fees, and adjusting the trailing commission mechanism. The aim is to further reduce the costs of fund investors, standardize the order of the public fund sales market, protect the legitimate rights and interests of fund investors, and promote the high-quality development and transformation of the public fund industry. Compared to soliciting comments, the official draft has carried out a series of optimizations, and the rules are more detailed. At the same time, some requirements have been relaxed to mitigate the impact on the market.

On the one hand, in the approval (application) purchase fee arrangement, the upper rate limits for active stock types and index types are refined, and flexible arrangements for debt-based redemption fees are provided to reflect respect for product differences and investment logic; on the other hand, independent provisions prohibiting discriminatory and exclusive sales arrangements have been added, reinforcing the regulatory shortcomings of sales practices. Furthermore, the official draft clearly sets the implementation date as 2026 and uniformly grants a 12-month transition period, providing a window for system transformation and smooth transformation of the industry.

How should various types of institutions be transformed under the new regulations?

For consignment agencies: Shifting from “re-launching, focusing on transactions” to “heavy ownership”, and shifting the core task from product sales to customer management. The new regulations reduce the maximum subscription rate, and at the same time, the full amount of the redemption fee is included in fund assets. The traditional product sales model that relies on quick turnover from investors to earn approval (subscription) fees and redemption fees is unsustainable. In the future, the core competitiveness of consignment agencies will shift to whether they can provide customers with continuous, professional, and in-depth services to enhance retention. Consignment agencies need to establish a service system centered on investors' interests: on the one hand, place investor education as pre-sales trust investment, and select long-term “peers” with similar ideas through professional content to effectively reduce future trust maintenance costs and frequent redemptions; on the other hand, shift the service model from discrete product promotion to comprehensive asset allocation centered on the customer's full account, and focus on long-term steady appreciation of the customer's overall wealth, thus building a truly differentiated moat based on deep trust and professional service in the context of falling rates.

Based on different endowments, the strategic choices of different consignment agencies may vary:

1) For banks: It can consolidate its advantages in full account asset management and service to high-net-worth customers and transform into a wealth manager. Under the new regulations, banks can shift from selling a single public offering and wealth management product to managing the overall financial assets of customers based on their advantages in terms of account vision and high net worth customer service. Bank accounts naturally cover the full financial data of the customer's savings, credit, investments, etc., and provide the soil for achieving true full account asset allocation. The core of the transformation is whether the customer account can be centered around the customer account, integrating diversified assets such as deposits, financial management, funds, insurance, etc., and making real cross-category and market-wide asset allocation suggestions and dynamic adjustments, from selling more products to protecting the customer's full account asset appreciation, and continuously increasing holdings in the process of building trust.

2) For brokerage firms: It can give full play to the advantages of on-market ETF trading and go deep into the institutional customer service value chain. On the one hand, on-market funds such as ETFs are exempt from mandatory punitive redemption fee arrangements, and their trading flexibility, low cost, and transparency advantages have been strengthened, directly consolidating brokers' home market advantage in transaction execution and product sales. On the other hand, in order to avoid the high short-term redemption costs of OTC funds, institutional clients' demand for more liquid in-market ETFs may increase markedly, opening up new growth space for brokers' institutional business. Therefore, the future transformation of brokerage sales can revolve around two major elements: activating the advantages of in-market ETFs and deepening institutional services. For the retail wealth management line, ETF sales can be combined with asset allocation, moving from promoting a single product to providing personalized asset allocation solutions based on ETF, and guiding customers to carry out long-term holdings or disciplinary transactions through continuous investor education to increase the scale of ownership; for institutional business lines, the key is to go deep into the needs of the entire institutional life cycle, break down brokers' departmental walls, and integrate cross-departmental capabilities such as investment and research, trading, trusteeship, derivatives, and securities lending into a targeted one-stop solution.

3) For the three parties: It is necessary to open up the entire process from drainage screening, to retention and transformation, to monetization and repurchase. Future competition is competition in the operating system.

Third-party marketing, especially Internet platforms, still have unique advantages in terms of reach breadth, user behavior data insight, and interaction efficiency. The key to competition under the new regulations may be to establish a complete closed loop of operation from drainage to retention to monetization and repurchase: front-end professional content is a sieve to achieve accurate customer stratification. By outputting professional, easy-to-understand, and well-valued investment and education content, the tripartite platform can efficiently attract and select “cognizant and same frequency” target customers. Essentially, it puts high after-sales costs ahead and brings together a core user base with high stickiness and low turnover. The mid-tier is empowered by digital tools to enable companionship and demand insight throughout the entire life cycle. Relying on a powerful technology and data center, users are managed with refined tags, and dynamic customer portraits are constructed based on their reading, interaction, position and risk assessment data. The back-end is solution-oriented, shifting from product shelves to wealth services. The focus of competition is no longer on the level of rate discounts, but on whether the entire operating system can continue to create value for customers, thereby improving total retention and total profit throughout the customer life cycle.

For public funds, the new regulations may further promote the strategic differentiation of public equity products, and the retail and institutional sales business lines also need to be transformed:

1) For leading fund companies, the strategic value of tool-based product lines has gone beyond the level of improving the product lineage. It is a key pillar for building core competitiveness as the industry returns to the roots of “trusting and valet financial management”. By setting a low rate upper limit and exempting punitive redemption fees, the new regulations not only strengthen the inclusive nature and instrumental positioning of index funds, but also guide the gathering of resources to leading institutions with scale effects, system capabilities, and ecological integration advantages, creating favorable conditions for them to build an ETF matrix covering multiple assets and multiple markets. This is of profound strategic significance for them to consolidate their market position and accurately match the asset allocation needs of medium- and long-term funds such as pensions.

In this context, the competitive landscape of the industry will be restructured at an accelerated pace, but simply relying on tool-based products is not a complete solution. Improving active management capabilities and ensuring long-term sustainable excess returns is the cornerstone of going hand in hand with instrumental layout. Historical data shows that active equity funds can create significant excess returns in the long run, and the new regulations closely link fund managers' remuneration to long-term performance, especially excess income relative to the benchmark. It motivates investment and research teams to deepen industry research and enterprise value exploration, thereby coping with the increase in market effectiveness and providing investors with a real alpha that exceeds market benchmarks.

More importantly, whether it is the layout of tool-based products or the refinement of active management capabilities, they should ultimately serve to enhance investors' “sense of attainment.” This means that brokerage firms and fund companies need to guide customers from simply chasing hot spots to strengthening strategic asset allocation and using multiple assets including stocks, bonds, gold, and commodities to build portfolios. Through the complementarity of multiple strategies, it is possible to effectively reduce portfolio fluctuations, thereby achieving the absolute return target of a higher Sharpe ratio. This is not only in line with the core concept of “investor-based” of the new regulations, but also an inevitable path to meet the upgrading of residents' wealth management needs and solve the “funds make money, citizens don't make money” dilemma in an environment of low interest rates and high market fluctuations.

2) For small and medium-sized fund companies, the ability to actively manage differentiation, specialization, and refinement may become the foundation of survival. In the context of falling rates, it is becoming increasingly difficult for small and medium-sized companies to compete head-on in terms of scale or cost. Limited resources are concentrated on segmented tracks that can build cognitive barriers and performance advantages. The core is to create sustainable and explainable excess revenue, and use this to attract channels and customer capital with specific risk preferences.

The future depends more on in-depth research, flexible decision-making, and a closer relationship of trust with core customers rather than a broad product shelf.

3) For institutional sales lines, direct sales capabilities may become a new competitive growth point. The implementation of new public fund rates and sales regulations, combined with the launch of the industry-unified institutional investor direct sales service platform (FISP platform), is profoundly promoting the transformation of public fund direct sales capabilities from a “cost center” to a “strategic asset.” The new regulations have weakened the incentives for consignment sales of non-equity products by lowering the maximum commission for consignment channels, and provided policy opportunities for fund companies to develop direct sales. As a “new infrastructure” for the industry, the FISP platform has significantly reduced the operating costs and operational risks of the direct sales business through standardized and automated “one-stop” services, and paved a “highway” for institutional direct sales.

Facing this opportunity, fund companies are taking a multi-pronged approach to enhance direct sales competitiveness: on the one hand, they attract customers by setting more relaxed subscription limits for direct sales channels and introducing differentiated strategies such as exclusive low rate I shares; on the other hand, leading companies continue to upgrade direct sales platform functions and embed tools such as full account management and grid trading to enhance customer stickiness and depth of service.

However, the pattern of industry fragmentation has intensified. For leading companies with strong resources, direct sales are a key gripper for reducing channel dependency, accumulating customer data, and directly conveying brand value. It is expected that a moat will be built by integrating investment and research capabilities and refined services. However, for many small and medium-sized companies, direct sales apps face the real dilemma of low download volume, high operation and maintenance costs, and difficulty in achieving scale effects, making “breaking up” an unavoidable choice. In the future, the development of direct sales capabilities may be polarized: leading institutions rely on a comprehensive ecosystem to strengthen the direct sales system, while small and medium-sized companies may need to focus more on investment services, specific customer groups, or cooperate with third-party platforms to find differentiated living space. At the end of the day, the core of direct sales capacity building under the guidance of the new regulations is to drive public funds to shift from large-scale competition to “investor-centered”, and to achieve high-quality development of the industry by improving service efficiency and investors' sense of acquisition.

4) For retail sales lines, the importance of holding a business may gradually surpass the initial launch. The official implementation of the new public fund sales regulations marks a deep transformation of the industry from “scale driven” to “investor return driven”. For retail sales lines, this means that the traditional business model of “starting again, light holding” is unsustainable, and the sales core must shift from chasing a single point of scale to improving customer retention, long-term asset holdings, and the ultimate profit level of customer accounts.

In this context, the focus of retail sales teams needs to be fundamentally changed

On the one hand, it is necessary to strengthen companionship throughout the entire cycle before, during, and after investment to help customers understand market fluctuations, adhere to fixed investment or long-term holdings through in-depth investment education and emotional counseling, thereby reducing irrational claims due to short-term games; on the other hand, we should actively collaborate with consignment channels to jointly build a service model based on the customer life cycle, from selling only popular products to providing customers with in-depth consulting services such as regular customer inspection and asset allocation rebalancing. Ultimately, by enhancing investors' “sense of acquisition” and post-investment returns, a sustainable competitive advantage built in industry transformation. However, this direction is also in line with the direction of regulation in evaluating public offering performance: for example, on December 6, 2025, the “Fund Management Company Performance Evaluation Management Guidelines (Draft for Comments)”, the product side assesses the long-term performance of products, the sales side assesses investors' profits and losses, etc.