In order to further regulate short-term trading behavior in the securities market, clarify recognition standards, and draw regulatory boundaries, the China Securities Regulatory Commission has previously issued the "Several Provisions on the Supervision of Short term Trading" (hereinafter referred to as the "Provisions"), which will come into effect on April 7, 2026. Industry organizations point out that the implementation of the Regulations helps stabilize market expectations and provides convenience for various professional institutional investors to participate in the market. Short term trading refers to the behavior of specific identity investors (shareholders holding more than 5% of the shares of listed companies or companies listed on the New Third Board, as well as directors, supervisors, and senior management personnel of listed companies or companies listed on the New Third Board) selling within six months after buying, or buying securities of the same listed company or company listed on the New Third Board within six months after selling. Article 44 of the Securities Law of the People's Republic of China stipulates the system of short-term trading, clarifying that the profits obtained from short-term trading belong to the company, and the board of directors of the company should recover the profits obtained. Article 189 specifies relevant punishment measures. In practical implementation of identification, it is necessary to further clarify core elements such as defining investor identity, determining buying and selling timing, and calculating shareholding standards; At the same time, certain specific situations, such as convertible corporate bonds (hereinafter referred to as "convertible bonds") conversion, inheritance, donation, market making business, etc., should be exempted during the execution process. The Regulation consists of twelve articles, mainly including: clarifying the applicable subjects and the scope of bond types. It is stipulated that both buyers and sellers must have the status of major shareholders, directors and supervisors, and those who do not have it at the time of purchase but have it at the time of sale must comply with the short-term trading system. Regulations stipulate that "other securities with equity nature" include depositary receipts, convertible bonds, convertible bonds, etc., and refine and clarify regulatory requirements. Clarify the calculation standards for determining shareholding and trading timing. The time point for buying and selling is set as the date of securities transfer registration, and the shareholding ratio of major shareholders is calculated by combining the issued shares of the same listed company both domestically and internationally. The number of securities held by overseas investors through different channels is also calculated by combining, in accordance with relevant regulations. The Regulations also specify the circumstances under which exemptions apply. Clarify 13 exemption situations, including preferred stock conversion, ETF subscription and redemption, grant, registration, exercise of equity incentives, judicial enforcement, market making transactions, fraudulent issuance and repurchase orders, etc., to support market development and regulatory needs. At the same time, it is stipulated that relevant situations involving the use of information advantages to seek illegal benefits shall not be exempted. For securities accounts managed by professional institutions and opened separately according to products or combinations, the shareholding shall be calculated separately according to the One Code Account of the product or combination, including domestic and foreign public funds, national social security funds, basic pension insurance funds, annuity funds, insurance funds, collective private equity asset management products managed by securities and futures fund operating institutions, and private equity securities investment funds that meet regulatory requirements, in order to facilitate trading, promote opening up to the outside world, and facilitate the entry of medium and long-term funds into the market. At the same time, it is explicitly stated that if the above-mentioned products or combinations cannot achieve independent and standardized operation, or there are conflicts of interest, illegal and irregular situations, they will not be calculated separately. Industry insiders generally believe that the introduction of the "Regulations" will help stabilize market expectations and improve transaction convenience. CITIC Securities stated that the "Regulations" reflect the regulatory approach of the regulatory authorities to stabilize market expectations and facilitate compliant transactions by refining rules while adhering to the bottom line of compliance. The implementation of the Regulations helps to reduce the institutional costs of medium and long-term capital entering the market, and provides convenience for various professional institutional investors to participate in the market. Clarifying rules will reduce compliance concerns among market participants due to vague identification standards and avoid unintentional violations caused by misunderstandings. The implementation of separate calculation of shareholding for securities accounts managed by professional institutions and opened separately according to products or combinations has solved the operational difficulties of short-term trading restrictions that may be triggered by inter product trading of institutional funds, and provided institutional convenience for long-term funds such as social security funds and pension funds to participate in the market. (New Society)