China Securities Regulatory Commission's new regulations on short-term trading will take effect starting today.

Today, the "Regulations on the Supervision of Short-term Trading" formulated by the China Securities Regulatory Commission came into effect. The new regulations further clarify the supervision arrangements for large shareholders holding more than 5% and executives engaging in short-term trading, with the core objective of preventing insiders from profiting through short-term trading using information advantages, and maintaining market fairness. The main contents of the "Regulations" include: first, clarifying the applicable subjects and scope of securities. It stipulates that when buying and selling, if both the major shareholders and executives hold positions, they must comply with the rules of short-term trading. The "other securities with equity nature" include depositary receipts, convertible bonds, exchangeable bonds, etc., specifying the supervision requirements. Secondly, clarifying the standards for determining the calculation of shareholding and trading time points. It stipulates that the time point of buying and selling is the securities registration date, the percentage of major shareholders' holdings is calculated by combining the shares issued by the same listed or listed company domestically and abroad, and the securities held by overseas investors through different channels are also combined for calculation, ensuring consistency with relevant regulations. Thirdly, clarifying the exemptions. Based on the Securities Law of the People's Republic of China and in combination with regulatory practices, the regulations specify 13 exemptions including preference shares conversion, ETF subscription and redemption, equity incentives related to grant registration and exercise, judicial enforcement, market-making transactions, fraudulent issuance repurchase orders, support market development and regulatory needs. At the same time, it is stipulated that exemptions will not be granted in cases involving the use of information advantages to seek illegal gains. Fourth, in cases where professional institutions operate separately by opening securities accounts for products or portfolios, the holdings of products or portfolios are calculated separately in a single account, including public funds managed by domestic and foreign institutions, national social security funds, basic old-age insurance funds, pension funds, insurance funds, collective private equity management products managed by securities and futures funds management institutions, private equity securities investment funds that meet regulatory requirements, etc., in order to facilitate trading, promote opening-up, and attract medium and long-term funds into the market. Meanwhile, it is clarified that if the above-mentioned products or portfolios cannot operate independently in compliance or if there are conflicts of interest or illegal activities, they will not be counted separately.