Multiple Private Equity Firms Receive Notice to Suspend New Cross-Border TRS

PANews, June 24 – According to a report by Shanghai Securities News, on June 24, multiple private equity professionals disclosed that they received notices from their partner securities firms last night, with regulators requiring a halt to new increases in cross-border Total Return Swap (TRS) positions for managers. According to public information, a TRS (Total Return Swap) is a financial derivative that allows private equity funds to gain exposure to the returns (or losses) of overseas assets without directly holding them (with principal remaining onshore), by entering into a return swap agreement with a counterparty securities firm. This year, driven by the strong performance of global technology sectors, many private equity funds have been allocating to overseas assets through cross-border TRS. Since May, eight government agencies including the China Securities Regulatory Commission (CSRC) have jointly issued the "Implementation Plan for the Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities," taking tough action against leading cross-border internet brokers such as Tiger Brokers, Futu Holdings, and Longbridge Securities. As the space for mainland residents to engage in illegal cross-border stock trading has narrowed, private equity products using cross-border TRS to allocate to overseas technology targets have increasingly attracted capital attention. Multiple private equity professionals disclosed: "The relevant notice came quite suddenly, and some product strategies may see short-term changes. We are currently awaiting further detailed specifications on cross-border TRS quotas."

Multiple Private Equity Firms Receive Notice to Suspend New Cross-Border TRS

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