The new regulations on short-term trading by the China Securities Regulatory Commission will come into effect today.

The "Several Provisions on the Supervision of Day Trading" formulated by the China Securities Regulatory Commission will come into effect today (April 7th). According to the CSRC website, on March 6th, in order to implement the day trading supervision system stipulated in the Securities Law, and to facilitate the entry of medium and long-term funds into the market, the CSRC formulated and released the "Several Provisions on the Supervision of Day Trading" (referred to as the "Provisions" below). The new rules further clarify the supervision arrangements for day trading by shareholders with more than 5% of the shares and directors, supervisors, and senior management (referred to as the directors and senior management). The core purpose is to prevent insiders from using information advantages to profit from day trading and to maintain market fairness. Based on a systematic review of domestic and foreign legislation, judicial practice, and regulatory practice, the "Provisions" respond to market concerns and further clarify the supervision arrangements for day trading by major shareholders and executives. The "Provisions" consist of twelve articles, covering the following main points: 1. Clarifying the applicable subjects and types of securities. The rules stipulate that if both buying and selling involve the identity of a major shareholder or director/senior management, or if the buying does not involve but the selling does, the day trading system must be complied with. The definition of "other securities with equity characteristics" includes depository receipts, convertible bonds, exchangeable bonds, etc., providing detailed and clear regulatory requirements. 2. Clarifying the criteria for determining shareholding and transaction timing. The rules stipulate that the transaction timing is the securities transfer registration date, the shareholding ratio of major shareholders is calculated by combining all shares issued by the same listed company domestically and internationally, and the number of securities held by foreign investors through different channels is combined, ensuring alignment with relevant regulations. 3. Clarifying exemption situations. Based on the authorization of the Securities Law and in combination with regulatory practice, the rules specify thirteen exemption situations including preferred stock conversions, ETF subscriptions and redemptions, stock incentive grants, registrations, exercises, judicial enforcement, market making trades, mandatory buybacks for fraudulent issuances, supporting market development and regulatory needs. However, exemptions will not be granted in cases involving the use of information advantage for illegal gains. 4. For cases managed by professional institutions and with securities accounts opened separately based on products or portfolios, the rules stipulate that shareholding will be calculated separately based on the product or portfolio's single account, including public mutual funds, national social security funds, basic pension insurance funds, annuity funds, insurance funds, collective private equity management products managed by securities and futures fund management institutions, compliant private equity securities investment funds, etc., promoting ease of trading and encouraging the entry of medium and long-term funds. The rules also specify that if the above-mentioned products or portfolios cannot operate independently in a standardized manner or if there are conflicts of interest, illegal activities, etc., they will not be calculated separately. Previously, the CSRC had solicited public opinions on the "Provisions" and conducted multiple rounds of discussions and research, and relevant opinions and suggestions have been fully absorbed, adopted, or explained. All parties have expressed support for the issuance of the "Provisions", with positive evaluations, believing that it will help stabilize market expectations and improve trading convenience. Next, the CSRC will organize securities trading venues and other entities to implement and continuously optimize the supervision of day trading in accordance with the "Provisions", effectively maintaining market order and promoting the high-quality development of the capital market. This article is adapted from the official website of the CSRC, edited by GMTEight: Feng Qiuyi.