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I. Regulatory Policy Background

On June 18, 2025, China Securities Regulatory Commission (CSRC) Chairman Wu Qing delivered a keynote speech at the 2025 Lujiazui Forum (Full speech: https://xinwen.bjd.com.cn/content/s68523cece4b0bd64e2dfc32e.html ), stating that the CSRC would accelerate the implementation of a package of key measures for capital market opening in 2025, including expanding the range of products available for foreign investment trading.

On June 17, 2025, the CSRC issued an announcement (Full announcement: https://www.csrc.gov.cn/csrc/c101954/c7565194/content.shtml ] "Announcement on Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors Participating in Stock Options Trading"_China Securities Regulatory Commission), "allowing Qualified Foreign Investors to participate in Exchange Traded Fund (ETF) options trading listed on trading venues established with the approval of the State Council or the CSRC. Qualified Foreign Investors participating in ETF options trading shall comply with the trading rules of the CSRC and the relevant trading venues, and the purpose of trading is limited to hedging transactions. This announcement takes effect from October 9, 2025."

On September 30, 2025, the Shanghai Stock Exchange (hereinafter "SSE") (https://www.sse.com.cn/assortment/options/rule/c/c_20250930_10793582.shtml ) and the Shenzhen Stock Exchange (hereinafter "SZSE") (https://www.szse.cn/option/notice/notify/t20250930_616424.html ) respectively issued the "Notice on Matters Related to Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors Participating in Stock Options Trading". QFIs must submit applications for hedging quotas for relevant options varieties to the exchanges through their designated options operators. Only after the exchange approves the quota can they participate in hedging transactions. According to the Notice, the SSE and SZSE began accepting business applications from QFIs for participating in stock options trading starting from September 30, 2025, and October 9, 2025, respectively.


II. Tradable Products

Currently, the following 9 ETF options products are listed and traded on the Shanghai and Shenzhen Stock Exchanges:
Shanghai Stock Exchange:

  • SSE      50 ETF Options

  • CSI      300 ETF Options

  • CSI      500 ETF Options

  • STAR      50 ETF Options

  • Science      and Technology Innovation Board 50 ETF Options
         Shenzhen Stock Exchange:

  • SZSE      100 ETF Options

  • CSI      300 ETF Options

  • CSI      500 ETF Options

  • ChiNext      ETF Options


III. Hedging and Position Limits

According to the Notice, Qualified Foreign Investors (QFIs) can apply for spot long hedging and spot short hedging position limits. Currently, the Shanghai and Shenzhen Stock Exchanges have not yet released specific implementation rules for QFI participation in ETF options trading.
It is expected that the exchanges will formulate specific rules for QFIs by referencing the previously applicable "SSE Stock Options Position Limit Management Business Guidelines" and "SZSE Stock Options Pilot Position Limit Management Business Guidelines" (hereinafter collectively referred to as the "Guidelines") for domestic investors. Relevant content from the Guidelines is as follows:

(1) Definition of Hedging

  • Spot      Long Hedging: Refers to buying a corresponding number of put      options while holding the underlying assets.

  • Spot      Short Hedging: Refers to buying a corresponding number of call      options while selling the underlying assets short.

(2) Conditions for Position Limit Adjustment

  • Shanghai      Stock Exchange: Investors may apply to increase the position      limits for a single options contract (including long position limit, total      position limit, and daily buy-to-open limit) for hedging purposes,      provided the following conditions are met:

    • (a)       Spot Long Hedging: The average daily number of contracts corresponding to       the held underlying assets (calculated based on daily closing statistics)       over the past 1 month is greater than the long position limit for that       options contract.

    • (b)       Spot Short Hedging: The average daily number of contracts corresponding       to the short balance of the underlying assets (calculated based on daily       closing statistics) over the past 1 month is greater than the long       position limit for that options contract.

  • Shenzhen      Stock Exchange: The main difference from the SSE rules is the      quantification of the "greater than" condition as      "occurring 3 times or more" and changing the statistical period      from "1 month" to "30 trading days". The specific      conditions are:

    • (a)       Spot Long Hedging: In the recent 30 trading days, instances where the       number of contracts corresponding to the held underlying assets       (calculated based on daily closing statistics) is greater than the long       position limit have occurred 3 times or more.

    • (b)       Spot Short Hedging: In the recent 30 trading days, instances where the       number of contracts corresponding to the short balance of the underlying       assets (calculated based on daily closing statistics) is greater than the       long position limit have occurred 3 times or more.

(3) Upper Limit for Position Limit Adjustment

  • Shanghai      Stock Exchange: Based on the principle of fair treatment for      similar entities, the adjusted upper position limit is determined      according to the following standards:

    • (a)       Spot Long Hedging: Take the smaller of – (A) The applied-for long       position limit; (B) 1.5 times the average daily number of contracts       corresponding to the held underlying assets in the 1 month prior to       application.

    • (b)       Spot Short Hedging: Take the smaller of – (A) The applied-for long       position limit; (B) 1.5 times the average daily number of contracts       corresponding to the short balance of the underlying assets in the 1       month prior to application.

  • Shenzhen      Stock Exchange: The difference lies in changing the "average      daily value in the 1 month prior to application" to the "maximum      value of the held quantity or short balance during the 30 trading days      prior to application".


IV. Operational Recommendations

It is recommended that foreign investors maintain close communication with their options operators and make relevant preparations in advance. Foreign investors intending to participate in ETF options trading should first apply to the CSRC through their custodian bank to amend their QFI investment plan, including ETF options as an investable product. Only after the amended investment plan is approved can they authorize a qualified options operator (broker) to submit an application for the corresponding hedging quota for the specific options product to the exchange.