New Derivatives Trading Administrative Measures (Trial)

The Measures for the Supervision and Administration of Derivatives Trading (Trial) (“DTAM”) were promulgated by the CSRC in May 2026 and will take effect on 16 November 2026.

1. Background

When first introduced in 2023, the DTAM drew significant attention for their perceived extraterritorial impact on offshore TRS structures referencing PRC assets. An offshore TRS typically involves:

• Offshore swap – between an offshore investor and offshore broker, providing synthetic exposure to PRC assets.

• Onshore hedge – the broker hedges via QFI, Connect programmes, internationalised futures, or back to back swaps with PRC affiliates.

Earlier drafts suggested the offshore swap limb might be regulated, raising concerns on feasibility and compliance cost. The final DTAM substantially ease these worries, focusing on PRC venues and intermediaries.

2. Applicability of the DTAM

• Applies to CSRC supervised securities/futures exchanges and PRC brokers authorised for derivatives.

• Covers swaps, forwards, non standard options and combinations (excluding futures).

• Excludes interbank derivatives and OTC trades organised by banks/insurers.

3. Obligations of Onshore Brokers

• Record keeping: retain derivatives records for 20 years.

• Reporting: provide transaction data to CSRC on request.

• Exchange oversight: exchanges may demand detailed hedging information at any time.

4. Offshore Buy Side Implications

• Offshore swap limbs remain outside direct scope.

• Futures exchanges may aggregate certain derivatives with futures for position limits/reporting, though rules are pending, and issuance of which is not the top priority.

• DTAM ban holders of restricted shares from using derivatives to monetise holdings, extending restrictions beyond substantial shareholders The term “restricted shares” refer to shares are not freely tradable, or shall only be traded with conditions, for example, shares acquired via private placement/non-public offering that are subject to lock-up period and conditions.

• Abnormal trading remains covered by existing PRC laws, including overseas activity.

5. Key Takeaways

• Scope narrower than feared; offshore TRS not directly captured.

• Onshore brokers face heavier compliance; offshore investors lighter obligations.

• Position aggregation powers could affect hedging capacity/costs, but no broad “look through” rule.

• Compliance with abnormal trading standards remains essential.

6. Conclusion

The final DTAM reflect a more balanced approach. For overseas buy side investors, immediate compliance burdens are limited, but close monitoring of requirements on aggregation and abnormal trading standards is advised.

Should you have any questions or require further assistance regarding any of the above, please do not hesitate to contact Alan Tang at Simmons & Simmons or Melody Yang at YaoWang Law Offices (our strategic alliance firm in China Mainland).