China's Securities Regulator Issues Draft of New Short-Swing Trading Rules
ISSUING AUTHORITY:
China Securities Regulatory Commission
DATE OF ISSUANCE:
July 21, 2023
China Securities Regulatory Commission (CSRC) promulgated Several Provisions on Improving the Regulation of Specific Short-Swing Trading (Draft for Comments) (the “Draft”) to seek public opinions on July 21, 2023.
Specific short-swing trading refers to the act where a shareholder holding more than 5% of the shares (“major shareholder”), as well as a director, supervisor, or senior officer of a listed company or a company listed on the National Equities Exchange and Quotations (NEEQ, known as the New Third Board), purchases and then sells, or sells and then purchases, the stocks or other securities of equity nature of such company within six months.
Previously, the Securities Law stipulated that all proceeds from the aforementioned short-swing trading shall belong to such company. The Draft is of great help to clarify when those requirements apply.
The Draft mainly specifies the scope of subjects to which specific short-swing trading rules are applicable, the calculation standards for securities held by specific investors, the scope of specific securities, specific purchase and sale activities of short-swing trading, and applicable standards for domestic institutions and foreign investments. The Draft also provides certain exemptions for short-swing trading. In addition, the new rules will not affect trading by ordinary investors.
According to CSRC, the move is conducive to standardizing the supervision of short-swing trading of specific investors, stabilizing market expectations, and enhancing the attractiveness of the A-share market.
CSRC solicited opinions from the public until August 20, 2023.
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