The China Securities Regulatory Commission issues "Several Provisions on the Supervision of Short-term Trading"

To implement the short-term trading supervision system stipulated in the Securities Law and facilitate the entry of medium and long-term funds into the market, the China Securities Regulatory Commission (CSRC) has formulated and issued the "Several Provisions on the Supervision of Short-term Trading" (hereinafter referred to as the "Provisions"), which will be implemented from April 7, 2026. Based on a systematic review of domestic and foreign legislation, judicial practices, and regulatory practices, the "Provisions" respond to market concerns and further clarify the relevant supervision arrangements for short-term trading by major shareholders, directors, and senior executives. The "Provisions" consist of twelve articles, with the main contents including: Firstly, clarifying the applicable subjects and scope of securities. It is stipulated that those who have the status of major shareholders or directors and senior executives when buying or selling securities, or those who do not have such status when buying but acquire it when selling, must comply with the short-term trading system. The "other securities with equity nature" include depository receipts, convertible bonds, exchangeable bonds, etc., detailing and specifying supervision requirements. Secondly, clarifying the calculation standards for determining shareholdings and transaction timing. It is stipulated that the timing of buying and selling securities is the transfer registration date, and the proportion of shareholding by major shareholders is calculated based on the combined shares of the same listed or listed company issued domestically and internationally. The quantities of securities held by foreign investors through different channels are also calculated together to ensure alignment with relevant regulations. Thirdly, stipulating exemption circumstances. Based on the authorization of the Securities Law and combined with regulatory practices, the "Provisions" specify thirteen exemption circumstances, such as preferred shares conversion, ETF subscription and redemption, equity incentive grants, registrations, and exercises, compulsory judicial enforcement, market-making transactions, and fraudulent issuances ordered for repurchase, to support market development and regulatory needs. It is also clarified that exemptions will not be granted if the circumstances involve seeking illegal benefits through information advantages. Fourthly, for cases where professional institutions manage securities accounts separately according to products or portfolios, the shareholdings are calculated separately for each product or portfolio's universal account. This includes public funds managed by domestic and foreign investors, national social security funds, basic pension insurance funds, pension funds, insurance funds, collective private fund management products managed by securities and futures fund management institutions, and private equity securities investment funds that comply with regulatory requirements, to facilitate trading and promote the entry of medium and long-term funds into the market. It is also specified that if these products or portfolios cannot operate independently or if there are conflicts of interest, violations, etc., they will not be calculated separately. Previously, the CSRC has solicited public opinions on the "Provisions" and conducted multiple rounds of discussions and research. Relevant opinions and suggestions have been fully taken into account and adopted or explained. All parties have expressed support for the introduction of the "Provisions," with positive evaluations, believing that it will help stabilize market expectations and enhance trading convenience. Next, the CSRC will organize securities trading venues to ensure the implementation of the "Provisions," continuously optimize short-term trading supervision, effectively maintain market order, and promote the high-quality development of the capital market. This article is compiled from the official website of the CSRC, edited by GMTEight: mz.