Chinese Regulators Tighten Restrictions on Offshore Investing via TRS

Chinese regulators have taken steps to restrict access to overseas assets through derivatives, focusing on total return swaps (TRS) as a channel for mainland investors. Unlike previous crackdowns on unlicensed offshore brokers, authorities have directed domestic brokerages to halt the expansion of offshore-related portfolios, including new TRS contracts and increases in existing mandates. This move is seen as a response to the influx of high-net-worth capital into global technology stocks, particularly in the US, Japan, and South Korea. TRS, a derivative contract that allows one party to receive the total return of a reference asset, has gained popularity among mainland…