Overview
On October 19, the 2026 Financial Street Forum opened in Beijing, with the heads of the People’s Bank of China (PBOC), the China Securities Regulatory Commission (CSRC) and the National Financial Regulatory Administration (NFRA) delivering a dense set of policy and reform signals. PBOC Governor Pan Gongsheng announced a deepening of the loan prime rate (LPR) reform, a study to switch the main open-market operation tenor to overnight so that the overnight repo rate becomes the primary policy rate, and an explicit commitment to “exit deposit and lending benchmark rates.” CSRC Chairman Wu Qing outlined measures to build a higher-quality capital market, including approval of the first batch of 18 active ETFs, the creation of a fund-industry monitoring center, and tighter rules against illicit share reductions.
In concrete terms, the 18 active ETFs cleared review after roughly three months; the industry expects issuance of about ¥2 billion, implying nearly ¥36 billion of fresh capital for A-shares. Products are slated to disclose offering documents around October 20, start sales on Friday, and list about a month later. Separately, the CSRC issued the Administrative Rules on Administrative Penalties for Cases of Illegal Securities Transfer, effective December 1, 2026, sharpening the definition and penalties for circumvention-style reductions and “proxy-account” structures.
Against the backdrop of the regulator’s “risk prevention, strong supervision, high-quality development” agenda, the moves are read as a two-pronged effort—channeling liquidity while erecting rules—to stabilize expectations as the Fed’s rate decision approaches and external volatility rises.
Background & Interpretation
1. Macro and Policy Context
The PBOC’s monetary-framework transition has been in train for years. As interest-rate liberalization advanced, benchmark deposit and lending rates have been progressively replaced by market-based anchors such as the LPR and the interbank overnight repo rate. Governor Pan confirmed the next step is to substitute market rates for accounting references and formally exit benchmark rates, while studying a shift of open-market operations to overnight tenors—a more thorough “re-anchoring” of the policy rate. The aim is to improve rate-transmission efficiency and clarify price-based control. Complementing this, the PBOC will set up a liquidity-support tool for large non-bank redemptions, widen the Standing Lending Facility’s eligibility, and promote bond-market interconnectivity.
2. Core Drivers and Underlying Mechanisms
Active ETFs are the pivotal “inflow” instrument. Unlike traditional off-exchange active funds, active ETFs list on exchanges and disclose holdings in near real time, combining active management with ETF transparency and low fees. As wealth migrates from net-asset-value wealth products to equities, active ETFs offer standardized access for medium- and long-term money. The new reduction-penalty rules, by defining circumvention and proxy structures, raise the cost of regulatory arbitrage and protect investors—concrete delivery of the “strong supervision” stance.
3. Market Structure and Industrial Chain Impact
The nearly ¥36 billion of active-ETF inflows, alongside expected insurance and social-security money, should improve A-share supply-demand and particularly benefit broad-based indices and leading fund managers with active capabilities. Broker channels gain a wave of underwriting and distribution revenue; listed firms gain a more stable price environment under stricter reduction rules. Yet actual inflow pace depends on fundraising and sentiment; the near-term value is the policy “stabilizer” signal.
Implications & Outlook
In the short-to-medium term, the rate “re-anchoring” will be gradual; a clearer policy-rate system helps lower real financing costs and steady bank net interest margins. On capital markets, the active-ETF wave and reduction rules both point to “broaden sources, set rules.” Watch the actual active-ETF fundraising size, enforcement of the December 1 reduction rules, and spillovers from the Fed’s October 28 meeting.
Takeaways for Industry Participants
Fund managers should seize the active-ETF window and build differentiated strategies with compliant disclosure. Wealth managers can steer clients toward long-horizon allocation rather than momentum chasing. Large shareholders must align reductions with the new rules to preserve confidence. Retail investors may note structural opportunities in the policy tailwind while guarding against short-term overpricing of “good news.”
This column compiles industry information and shares technical perspectives; it does not constitute investment advice.