Assessing Renewed Regulatory Focus on TRS: CHINA BROKERS & ASSET MANAGERS

Research evidence excerpt

Assessing Renewed Regulatory Focus on TRS: CHINA BROKERS & ASSET MANAGERS

Equity Research

25 June 2026 | 9:08PM HKT

CHINA BROKERS & ASSET MANAGERS

Assessing Renewed Regulatory Focus on TRS

Media reports that the creation of new stock-related cross-border Total Return Shuo Yang, Ph.D.

+852-2978-0701 | shuo.yang@gs.com

Swaps (TRS) has been suspended (with existing positions allowed to be closed out Goldman Sachs (Asia) L.L.C.

but not subject to forced liquidation) have intensified market concerns over Claire Ouyang

disruptions to cross-border business. +852-2978-6686claire.x.ouyang@gs.com|

Goldman Sachs (Asia) L.L.C.

We synthesize our recent discussions with companies (see GFS management meeting

takeaways), the latest news and financial reporting data, to assess key points of

interest:

1. Cross-border TRS tightening - Not a new variable. Since the beginning of 2024,

cross-border TRS have already been subject to a “no net new additions”

constraint, suggesting the current measure is a reinforcement of this rule,

specifically for equities; TRS of other assets including FICC are not currently

subject to a “no net new additions” restriction.

2. A look at TRS revenue contribution suggests impact from “no net new

additions” restriction is less than 4%. Using two approaches (details below),

we calculate the impact to broker revenue to be in the range of 1% to 4% (the

variation is due to different calculation methodologies, as detailed in our

estimates).

3. The key differentiator for individual stocks lies in their Hong Kong business

exposure. CICC has a high proportion of its business in Hong Kong and can serve

clients without relying on offshore TRS. We maintain that the key drivers for

brokers’ performance are not TRS or acquiring clients lost by online brokers, but