China's regulators halt new cross‑border TRS for private funds

Several private‑equity managers in China received notices that, from June 24, they must suspend the addition of new cross‑border Total Return Swaps (TRS). The regulatory directive follows a joint plan issued by the China Securities Regulatory Commission and seven other authorities to curb illegal cross‑border securities and futures activities. The crackdown targets major internet brokerage platforms such as Tiger Brokers, Futu Holdings and Changqiao Securities, and narrows the space for mainland residents to trade overseas assets via TRS structures. As a result, funds that have used TRS to gain exposure to high‑performing global tech stocks may need to adjust strategies in the short term while awaiting further guidance on permissible TRS limits.

The sudden suspension reflects heightened supervision of offshore asset‑allocation tools, aiming to reduce systemic risk and ensure greater transparency in the private‑fund sector.