Multiple private equity firms have been notified to suspend new cross-border TRS

According to the Shanghai Securities Journal, multiple private equity industry insiders revealed that they received notifications from cooperating brokerages last night, stating that regulators have requested a suspension of new cross-border TRS (Total Return Swap) scale by managers. According to public information, TRS is a financial derivative that allows private equity firms to obtain the returns (or losses) of an asset without directly holding foreign assets (with principal not leaving the country) by signing a return swap agreement with counterpart brokerages. Since the beginning of this year, due to the impressive performance of the global technology sector, many private equity firms have allocated overseas assets through cross-border TRS.

Since May, the China Securities Regulatory Commission and seven other departments jointly issued the "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Operations," targeting leading cross-border internet brokerages such as Tiger Brokers, Futu Holdings, and Changqiao Securities. As the space for mainland residents to engage in illegal cross-border stock trading shrinks, private equity products using cross-border TRS to allocate overseas technology targets have increasingly attracted capital attention.