In the News: CSRC to Exempt Foreign Investors Investment Rule; Foshan Govt Vastly Increases Overseas IP Subsidies; and Regulators Approve JV for BNP Paribas and ABC

Credit: Blue Planet Studio/Adobe Stock

CSRC to Exempt Foreign Investors Investment Rule

According to recent news reports, the China Securities and Regulatory Commission (CSRC) is considering granting foreign investors that invest in A-shares either via qualified foreign institutional investors (QFIIs) or the Stock Connect scheme an exemption for the short swing profit rule (SSPR). This puts them on an equal footing with domestic asset managers, who have already been granted the exemption. It would also help further capital investment from abroad in the China A-share market, providing easier access to Chinese capital markets.

Under current rules, if shareholders holding 5% or more shares or other equity-type securities in a listed company buy or sell the company stock within 6 months after the purchase or sale, the short-swing profit will be taken back by the company. The proposed exemption would allow share percentages of individual fund products to be taken while the total shares of a company held by a foreign fund manager would not be counted together for the SSPR rule. The CSRC is reportedly in the process of formulating this exemption rule.

According to Beijing-headquartered Han Kun Law Offices, the CSRC Exemption will allow fund managers to avoid the reporting and trading limitation thresholds under the SSPR. This will reduce regulation around short-term investments, increasing the appeal of A-shares after the increased MSCI shares weight in 2019.