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animalcrossingcryptocurrency| China Foundation: Private equity funds 'participation in DMA business shall not exceed 2 times leverage

Food 2024年04月30日 23:28 4 editor

Beijing Business Daily (Reporter Li Haiyuan) April 30AnimalcrossingcryptocurrencyThe China Foundation Association issued the guidelines on the Operation of Private Securities Investment funds (hereinafter referred to as the Operation guidelines)AnimalcrossingcryptocurrencyShall enter into force as of August 1, 2024.

animalcrossingcryptocurrency| China Foundation: Private equity funds 'participation in DMA business shall not exceed 2 times leverage

There are 42 operational guidelines, covering the raising, investment and operation of private equity funds, highlighting problem-oriented and risk-oriented, and scientifically setting differential normative requirements. It is worth mentioning that the operational guidelines require private equity funds to carry out over-the-counter derivatives trading with the goal of risk management and asset allocation, and to regulate the overall risk exposure of individual private equity funds to participate in over-the-counter derivatives trading from the perspective of leverage reduction and risk prevention.

CICC mentioned that the scale and leverage of private equity funds participating in long-short income swaps (DMA) have declined since February 2024, and the risk has been released. In view of the previous situation that private equity funds carry out leveraged transactions through DMA, the Operation guidelines clearly require private equity funds to participate in DMA business not to exceed 2 times leverage, and further control the level of business leverage.

In addition, the operational guidelines specify that the nominal principal of contracts for private equity funds to participate in snowball structured derivatives shall not exceed 25% of the fund's net assets, which is in line with the implementation caliber of securities and futures operating institutions' private equity asset management plans to participate in snowball structured derivatives, so as to reduce the scope for regulatory arbitrage. After the formal implementation of the operational guidelines, it is required that private equity funds that do not meet the provisions of over-the-counter derivatives trading shall not be newly raised or extended, but the over-the-counter derivatives contracts that have been opened can continue to operate to maturity and will not be affected.

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