Several private equity firms in mainland China have received notices to suspend the issuance of new cross-border TRS (Trade Restriction Account) documents.

According to Mars Finance, on June 24th, several private equity professionals in mainland China revealed that they received notices from their partner securities firms last night, requiring regulators to suspend the addition of new cross-border TRS (Total Return Swap) quotas for fund managers. Public information shows that TRS is a financial derivative that allows private equity firms to obtain gains (or losses) on overseas assets without directly holding them (principal not leaving the country) by signing a return swap agreement with a counterparty securities firm. This year, due to the strong performance of the global technology sector, many private equity firms have allocated overseas assets through cross-border TRS. Since May, eight departments, including the China Securities Regulatory Commission (CSRC), jointly issued the "Implementation Plan for Comprehensive Rectification of Illegal Cross-border Securities, Futures and Fund Operations," cracking down on leading cross-border internet securities firms such as Tiger Brokers, Futu Holdings, and Changqiao Securities. With the space for mainland Chinese residents to illegally trade stocks across borders shrinking, private equity products using cross-border TRS to allocate overseas technology assets have attracted increasing attention from investors. Several private equity professionals revealed: "The relevant notices were quite sudden, and some product strategies may change in the short term. We are currently waiting for further detailed regulations on cross-border TRS quotas."