Mutual fund companies should disclose detailed information about related transactions and elaborate costs and revenues of each business in their annual reports to make their management more transparent, according to new rules imposed by the China Securities Regulatory Commission.

Mutual fund companies are required to release the type, value and pricing policy of related transactions in their annual reports and list the parties who have the power to control the funds.

The new rules ask mutual fund companies to report detailed information about each business, including costs, revenues and related risks.

The reports should also contain a complete analysis by an accounting firm and provide explanations for projects which increase or decrease more than 50 percent in value.

"It aims to lay a firm foundation to help with the healthy development of the industry and tighten the management of mutual fund companies," said Sang Yu, an official with the Great Wall Fund Management Co.

Last year, China's mutual fund industry managed net assets worth 3.27 trillion yuan (US$454.1 billion), nearly quadrupling the 2006 figure of 856.4 billion yuan.

This year, the securities regulator is expected to introduce stock index futures, a "through train" program and reform of B shares to create more channels for investors.

The stock index futures will allow investors to sell short for the first time in the Chinese mainland. The "through train'' program enables investors to buy into Hong Kong equities through a Bank of China Ltd account in Tianjin, while the planned reform to merge the hard currency B shares with the yuan-denominated A shares will consolidate the market.

(Shanghai Daily February 22, 2008)