Brokerages told private-fund managers late on June 23 that new cross-border total return swap business could no longer be expanded, leaving some existing products in a sell-only mode.
China regulators have ordered a halt to new scale additions for private-fund managers’ cross-border TRS positions, with brokerages telling managers from the evening of June 23 that new business could not be expanded, according to multiple industry sources cited by Brokerage China. Some existing positions were reportedly unaffected, but certain products were shifted to a "sell only, no switching" status. The instrument has been used by mainland managers to gain exposure to overseas assets without moving principal offshore, making it a useful channel for cross-border positioning under capital controls. No public regulatory document had been released as of the report, leaving managers awaiting clarity on implementation and any quota framework.