CSRC spokesperson answers journalist's questions on private equity fund DMA business

On February 28, the spokesperson of the China Securities Regulatory Commission answered questions from reporters regarding the situation of private equity fund Direct Market Access (DMA) business. Reporter: Recently, there have been reports in the media about the tightening of private equity fund DMA business. What is the China Securities Regulatory Commission's evaluation on this matter? Direct Market Access (DMA) is a market-neutral trading strategy conducted by private equity funds and securities firms. In this strategy, the long side of the private equity fund selects a basket of stocks, while simultaneously using stock index futures for hedging, in order to obtain stock selection returns after hedging. Previously, due to strategic reasons, some private equity funds experienced net asset value drawdowns during market volatility. Securities firms and private equity funds actively strengthened risk control measures, steadily reduced leverage and scale, and to a certain extent, risk has been digested. According to data from China Securities Finance Corporation Limited, the scale of DMA business has steadily decreased since the market opened after the Spring Festival, with the daily trading volume accounting for approximately 3% of the total market turnover. The stable reduction of leverage in DMA business helps in risk control, and is conducive to the stable and healthy operation of the market. In the next step, the China Securities Regulatory Commission will continue to strengthen supervision and improve regulations for off-exchange derivative products such as DMA, guide the industry to control business scale and leverage, crack down severely on illegal activities, and maintain the stable operation of the market. This article is adapted from "CSRC Releases" official WeChat account, edited by Yang Wanlin from GMTEight.