On April 27th, Tianhong Fund issued a number of announcements announcing that Huatai Securities (601688) would cease to provide liquidity services for ETF products of seven companies, including CSC 500ETF Tianhong, Medical equipment ETF, etc., starting from April 29th, 2024.

On April 26th, Yi Fangda, Penghua, Huitianfu and Dacheng Fund Company also announced the termination of their single ETF liquidity service provider.

In retrospect, the "termination wave" of liquidity providers began at the end of March this year. Judging from the announcement issued, the source may be related to the relevant provisions of the "Shenzhen Stock Exchange Securities Investment Fund Business guidelines No. 2-liquidity Services", that is, the new regulations on liquidity services.

However, a brokerage wealth management told reporters: "the new regulations on liquidity services are only one aspect, but the sources and fees of securities are the key factors affecting the current ETF market-making."

Fund company ETF investors also told reporters: "previously released the relevant provisions of the second phase of public offering fund fee reform will change the original mode of payment of liquidity fees through rebates, and change the original ecology."

Intensive adjustment of liquidity service providers

Recently, a number of public offering funds have adjusted the liquidity service providers of their ETF products, and the main tone is to stop.

On April 27th, Tianhong Fund issued a number of announcements announcing that, in accordance with the "Shenzhen Stock Exchange Securities Investment Fund Business guidelines No. 2-liquidity Services" and other relevant provisions, from April 29th, 2024, the company terminated Huatai Securities to provide liquidity services for ETF products of seven companies, including CSC 500ETF Tianhong, Medical equipment ETF and so on.

Prior to this, Yinhua Fund issued an announcement from April 26th, 2024, terminating Zeshang Securities (601878) to provide liquidity services for Yinhua China Securities 1000 enhanced strategy-traded securities investment funds.

Recently, more than 10 public offerings, including Yi Fangda, China Merchants, Dacheng, Castrol, Guangfa, Fu Guo, Hua'an, Huaxia, Ping an, Jingshun Great Wall, Xizang Dongcai, ICBC Credit Suisse, and so on, have issued announcements announcing that some of their ETF products will cease to cooperate with liquidity service providers.

In addition to terminating the activities of liquidity service providers, fund companies are also adding new liquidity service providers and adjusting mainstream mobile service providers.

Hai Fu Tong CSI 2000 enhancement strategy ETF adds CITIC Securities (600030) as a liquidity service provider.

Huatai Perry announced that it will adjust the former mainstream mobile service provider of ETF in Shanghai, Hong Kong and Shenzhen Cloud computing industry to general service provider.

New regulations on mobility services have an impact

The fact that so many fund companies have issued the adjustment of liquidity service providers may have something to do with one factor, that is, the newly revised "Shenzhen Stock Exchange Securities Investment Fund Business guidelines No. 2-liquidity Services" (hereinafter referred to as "guidelines") issued on December 8 last year, that is, the new regulations on liquidity services.

Article 7 of the guidelines clearly stipulates that if a liquidity service provider occurs under one of the following six circumstances, the fund manager shall apply to the Shenzhen Stock Exchange to terminate the liquidity services provided by the liquidity service provider to the relevant funds: it no longer meets the conditions stipulated in Article 3 of these guidelines.Cryptogamesandroidfree; the agreement with the fund manager expires, changes or is terminated in advance; for some reason, the liquidity service provider is unable to provide normal liquidity services for one or more funds, and is in agreement with the fund manager; during the annual evaluation cycle, the number of periodic evaluation results of providing liquidity services for specific funds is D, accounting for 1% or more of the annual periodic evaluation (excluding annual evaluation). There are violations of laws and regulations, seeking illegitimate interests orCryptogamesandroidfreeHe may harm the legitimate rights and interests of investors.

In January this year, the Shanghai and Shenzhen exchanges successively released the results of the comprehensive evaluation of market makers of listed funds in 2023. Among them, a total of 19 main market makers in Shanghai participated in the evaluation, while the Shenzhen Stock Exchange announced 25 Shenzhen fund liquidity service providers with grade B or above. According to the evaluation results of the two cities, Guangfa Securities (000776), China International Capital Corporation, founder Securities (601901), Huatai Securities, China Merchants Securities (600999), CITIC Construction Investment (601066) and CITIC Securities have 7 brokerages rated as AA market makers in the two cities at the same time.

The Ping an Securities Research report pointed out that by the end of March 2024, the number of market-making ETF of CITIC Securities, Guangfa Securities and founder Securities all exceeded 600, an increase of 19, 23 and 18 respectively over the previous month. Huatai Securities market-making ETF number 586, China Merchants Securities, CITIC Construction Investment, Haitong Securities (600837) market-making number are more than 400.

The mode of payment for transaction commission will no longer exist.

Talking about fund adjustment liquidity service providers, a reporter from the Daily Economic News found that brokerage wealth management and fund investment researchers interviewed believed that the new regulations on liquidity services were only one aspect of the adjustment, and that the most important thing behind it was the "regulations on the Management of Securities Trading fees for Public offering Securities Investment funds" (hereinafter referred to as "regulations"), which will be implemented on July 1.

The new regulation clearly stipulates that the liquidity service fee shall not be paid through the transaction commission. This also means that the original model of paying liquidity service fees through trading volume will disappear in the future. " A fund company in Shanghai ETF told reporters.

A wealth manager of a brokerage told reporters that ETF makes the market for active trading and allows more investors to participate. Perhaps it does not necessarily make money, but through the subsidy of fees, comprehensive income as long as make money on the line, it is such a model.

In the view of the senior wealth manager, the new rules on liquidity services do have some impact, but the two most important issues are the source of securities and fees. Since the beginning of this year, the new rules of refinancing have affected the source of securities to some extent, and then the regulation of reducing fees and commissions will also have a certain impact on the fees of liquidity services, which may lead to some changes in the matching of resources of some brokerages. Now there are small fund companies, for example, fees are not enough, and some large and medium-sized fund companies need to form a deep cooperation with several brokerages to form a pool. And all these will bring about some changes in these market-making businesses.

There are also public fund researchers expressed their concerns to reporters, due to the lack of money-making effect, do not rule out the possibility that some securities firms may shrink the layout of the ETF market-making business.