FINANCE

China to Exempt Foreign Funds From Short-Swing Trading Rule

Published: Oct. 28, 2025 1:22 p.m. GMT+8

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China will exempt foreign-managed mutual funds from its short-swing trading rule, leveling the playing field with domestic peers and removing what global asset managers have called a major barrier to investing in the Chinese mainland market.

Under a new plan released Monday by the China Securities Regulatory Commission (CSRC), foreign mutual funds will be allowed to calculate their ownership in a listed company on a per-product basis. This grants them the same treatment as onshore mutual funds and social security funds.

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China will exempt foreign-managed mutual funds from its short-swing trading rule, granting them the same per-product ownership calculation as domestic funds.
The previous rule aggregated all holdings, making it difficult for foreign funds to remain under the 5% threshold and avoid penalties.
The change does not extend to pension or sovereign wealth funds, though other measures like a “green channel” and simplified applications were announced for long-term foreign investors.

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What Happened When

2019：: A survey of European and U.S. institutions by the Asia Securities Industry & Financial Markets Association identifies the short-swing trading provision as the biggest obstacle for large foreign investors entering the Chinese market.

Monday, October 27, 2025：: China Securities Regulatory Commission (CSRC) releases a new plan exempting foreign-managed mutual funds from the short-swing trading rule and allowing them to calculate their ownership in a listed company on a per-product basis.

AI generated, for reference only