On June 24, multiple private equity professionals revealed to our reporters that, on the evening of the 23rd, they had received notifications in succession from their partnering securities firms. These notifications indicated that regulatory authorities had required a suspension of the expansion of cross-border TRS (Total Return Swap) scale by asset managers. TRS, or Total Return Swap, is a financial derivative that enables private equity institutions to enter into total return swap agreements with counterparty securities firms. This arrangement allows them to reap returns or incur losses from assets without directly holding overseas assets, with the principal remaining within the domestic jurisdiction.

Since the beginning of this year, the global technology sector has demonstrated exceptional performance, prompting numerous private equity institutions to choose cross-border TRS as a means to allocate overseas assets. In May, eight departments, including the China Securities Regulatory Commission, jointly issued the "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities." This plan imposed stringent regulations on prominent cross-border internet securities firms such as Tiger Brokers, Futu Holdings, and Long Bridge Securities. Consequently, it has reduced the opportunities for mainland residents to engage in illegal cross-border stock trading, leading to increased interest from funds in private equity products that allocate overseas technology targets through cross-border TRS.

Several private equity professionals noted that the relevant notifications came as a surprise, and some product strategies may require short-term adjustments. They are currently awaiting further standardization of cross-border TRS quotas to ensure compliance and operational clarity.