The SFC is studying the formulation of two policies to apply the specific short-term trading regime to foreign investors, that is, to allow eligible overseas public funds to calculate the number of securities held by products in reference to domestic public funds, and to exempt the Hong Kong Central Clearing Company Limited from applying the specific short-term trading regime. Relevant ideas and measures have been basically defined, relevant procedures are being carried out, and will be announced and implemented in accordance with the law when conditions are ripe.

According to market participants, short-term trading refers to the behavior of major shareholders of listed companies and specific subjects of directors and supervisors who buy and sell shares of the company or other securities with equity nature in a relatively short period of time, or sell and buy again. According to the securities law, the trading behavior of these specific entities within six months is short-term trading. At the same time, the securities law empowers the SFC to prescribe exemptions. The China Securities Regulatory Commission has allowed domestic public funds to hold securities by product, that is, a number of public funds managed by a fund company to hold the same company's shares of up to or more than 5%, and within six months of trading, is not considered short-term trading. A similar arrangement has been made for the National Social Security Fund.

In recent years, with the increasing two-way opening-up of China's capital market, foreign capital has become one of the important participants in the A-share market. Data show that as of the end of September, foreign ownership of A-share circulation market value of 2.77 trillion yuan, accounting for 4.35% of the total A-share circulation market value. In the first three quarters of this year, the Shanghai and Shenzhen Stock Connect accumulated net inflows into the A-share market of 52.2 billion yuan. Under the Shanghai-Shenzhen-Hong Kong Stock Connect scheme, foreign investors generally access the A-share market through the Hong Kong Central Clearing Company Limited, which as A nominal holder does not actually participate in trading. At the same time, there is no essential difference between overseas public fund managers and domestic public fund managers in terms of internal control, governance structure and investment management mode.

According to the regulatory authorities, after in-depth research and extensive listening to the opinions and suggestions of all parties in the market, the CSRC intends to clarify the specific short-term trading rules applicable to foreign investment in accordance with the authorization of the securities law.

Experts believe that this is an important measure to further deepen the institutional opening up of the capital market, which is conducive to improving the convenience of foreign investment to participate in the A-share market, stabilizing foreign investment expectations, better guaranteeing the operational efficiency of the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, and promoting the high-quality development of the capital market.