BROKERS with no links to Hong Kong's fund management community are opposed to cash rebates, according to Hongkong Stock Brokers Association chairman Chu Chung-tin. While emphasising the association's plans to take no stance on the issue, Mr Chung said: ''Some disinterested brokers think brokers should not give commission rebates to their clients' fund managers as a matter of principle.'' The Securities and Futures Commission (SFC) plan to ban cash rebates to fund managers from brokers has stirred up controversy in the fund management and broking industry. Rebate-backing companies, led by Jardine Fleming and Schroders Asia, argue that the rebate is a commercial arrangement between fund manager and broker, and should not be a place where regulators determine prices. Fidelity Investment, which heads the opposition, believes rebates are unethical and ought to be banned. One preferred option is for the development of soft commission. Mr Chu said: ''They [some association members] argue that if fund managers get rebates from brokers, they should let their clients know. But their clients may not like it.'' Mr Chu said many of the association's smaller brokers were ambivalent towards soft commission, but a ban on this activity would probably be opposed. ''There are many schools of thought in the industry regarding the proposals on soft commission,'' Mr Chu said. ''Some brokers believe the thought behind the abolition of commission rebates is good, but argue it will have been carried too far if even soft commission is banned.'' These brokers say soft commission should not be scrapped because the practice is important in invigorating the market. Mr Chu said that the views on soft commission among association members were not all entirely positive. ''Some contend that soft commission does not provide a level playing field to brokers,'' he said. ''Bigger players with more financial resources can readily supply fund managers with things such as research reports. ''They fear big brokerages will dominate the market and small brokerages will lose out; they maintain that the law should ensure that everybody has equal opportunities.'' The controversy surrounding the rebate issue led last week to the SFC extending its deadline for receiving submissions. The regulator issued a consultative document on June 29 inviting comment from the public. Amid the growing debate, the original deadline for views was extended from August 1 to 15. Given the importance of cash rebates to many traditionally strong fund management groups in the territory, many practitioners see the debate as one of the most important in the field's history. A decision to ban cash rebates would force dramatic changes in relations between fund managers and brokers, and would trigger a surge in soft commission, wherein brokers offer services linked to fund management instead of cash. Last week, Jardine Fleming chairman Alan Smith said soft commission was inappropriate, as it would squeeze out small brokers' co-operation with larger fund management houses. He warned that the loss of the rebate system would threaten the territory's international competitiveness.