On 15 March 2013, the CSRC released the Interim Administrative Rules for Securities Investment Fund Sales Institutions’ Business Operations via Third Party e-commerce Platforms (the Interim Rules), allowing third party e-commerce platforms to provide services for fund distributors, effectively allowing more financial institutions to transact fund products. These Interim Rules have opened up the fund distribution channel that was previously limited to commercial banks, fund investment companies, securities firms and independent fund sales organizations.
Authorized fund sales institutions will now be permitted to sell their products using third party e-commerce platforms such as taobao.com or 360buy.com. Taobao Marketplace has applied to the CSRC to become one of the first Chinese online shopping websites to offer fund distribution, and it has already partnered with certain banks and insurance companies in distributing their banking or insurance-linked products.
Widening sales channels for funds will likely drive down commission fees charged by banks. For joint venture securities companies and foreign asset management companies, an alternative distribution channel should allow for greater product exposure and for global brands to stand out among domestic retail funds offered at commercial banks.