Member Article

According to news reports issued on October 16, 2022, to further facilitate foreign capital investment in China A shares, the China Securities Regulatory Commission ("CSRC") is considering formulating a special exemption rule for the short swing profit rule ("SSPR")[1] for foreign investors (e.g. qualified foreign investors/QFIs and foreign investors under the Stock Connect scheme). 

Exemption for foreign mutual funds

Under current PRC rules, an investor must generally aggregate its positions with all its concerted parties for purposes of disclosure of interest (“DOI”) rules2 and SSPR; thus, in principle, an asset manager must aggregate all the positions held by different products under its management. However, CSRC has granted an exemption from this requirement to domestic mutual funds managed by CSRC-licensed fund management companies (“FMCs”) with respect to their managed mutual funds (but not private funds or managed accounts); these FMCs may instead opt to comply with DOI rule and SSPR based on the positions held by each single mutual fund (“CSRC Exemption”).