China’s first revision since 2012 of insider trading rules that took effect on 27 July 2026 signal continued tightening of regulatory enforcement even though the amendments raise the monetary threshold for criminal prosecution, say lawyers.
Insider trading has become a major focus of securities regulation in recent years. In 2025, the China Securities Regulatory Commission investigated 701 cases involving securities violations, with insider trading accounting for the largest share, at more than 30% of the total, and increasing 22.47% year on year.
The Supreme People’s Court and the Supreme People’s Procuratorate jointly issued the Interpretation on Several Issues Concerning the Specific Application of Law in Criminal Cases of Insider Trading and Disclosure of Inside Information on 24 July, revising provisions on when inside information is deemed to have been formed, available defences and criminal prosecution thresholds.
Huang Jiangdong, partner and head of the financial securities compliance committee at Grandall Law Firm’s Shanghai office, said one of the most significant changes was that the point at which inside information was deemed to have arisen had been brought forward to the stage of a “preliminary intention”.
This meant the sensitive period for inside information might begin before a project was formally launched or submitted to the board for consideration, he said.
“Conduct that was previously regarded as preliminary discussions may now fall within the scope of insider trading regulation,” said Huang. Examples include a controlling shareholder discussing a potential transfer of control with family members or business partners, making initial contact with a prospective counterparty while revealing acquisition intentions, or consulting intermediaries on the feasibility of a major asset restructuring.
“Where a relatively clear transaction intention has already been formed and disclosed to closely connected persons, any related trading activity could attract regulatory scrutiny,” he said.
Huang said the amendments demonstrate that regulators were shifting “from focusing solely on trading activity to monitoring the entire process through which inside information is created, disseminated and used”.
Alongside the broader qualitative scope, the quantitative standards have also been revised.
Another key amendment raises the criminal prosecution thresholds for insider trading. The transaction value constituting “serious circumstances” has increased from RMB500,000 (USD74,000) to RMB2 million, while the threshold for “especially serious circumstances” has risen from RMB2.5 million to RMB20 million.
Zhu Jinshu, a partner at Zhong Lun Law Firm’s Beijing office specialising in securities compliance, said the higher threshold for “serious circumstances” was primarily intended to align with the 2022 revision to the Provisions on the Standards for Criminal Case Filing and Prosecution under the Jurisdiction of Public Security Authorities (II).
Meanwhile, the revised threshold for “especially serious circumstances” mirrored judicial interpretations covering offences such as market manipulation and trading on undisclosed information by setting the higher threshold at 10 times the ordinary criminal standard, she said.
“The revision helps unify enforcement standards, promotes better co-ordination between criminal prosecution and administrative penalties and reflects recent enforcement practice as well as the principle of proportionality between crime and punishment,” Zhu said. “However, the higher thresholds should not be interpreted as a relaxation of insider trading regulation. The overall approach remains one of rigorous enforcement.”
She added that where insider trading was committed by a person with knowledge of inside information, included the sale or disguised sale of inside information, or caused other serious consequences, the monetary threshold for determining “serious circumstances” was set at 50% of the general threshold, reflecting the authorities’ focus on more serious forms of misconduct.
In response to the new rules, Huang said companies should begin managing inside information from the earliest stages of planning significant transactions, promptly register insiders and implement confidentiality measures.
“They should strengthen record-keeping throughout the entire lifecycle of insider information, maintaining comprehensive records of meetings, communications and decision-making so as to satisfy regulatory requirements while providing objective evidence in support of legitimate trading defences,” he said.
Huang also said companies could provide targeted compliance training to ensure relevant personnel fully understood the revised rules.
From an institutional perspective, Zhu said effective compliance was not only about preventing information leaks but also ensuring that the planning of major transactions, the transmission of information and trading arrangements remained subject to effective controls.
“In addition to improving systems for insider registration, confidentiality undertakings and information barriers, companies should also strengthen oversight of external intermediaries, counterparties and other parties that may have access to inside information, ensuring that the formation, transmission and dissemination of such information are fully documented,” she said.
Zhu said companies could retain detailed records of how trading plans were formulated and implemented.
“In practice, some transactions have valid commercial justifications. However, the absence of contemporaneous records, arbitrary changes to trading plans or inconsistencies between execution and the original arrangements can make it difficult to demonstrate, after the event, that the trading was independent,” she said.
Looking ahead, Huang said regulators might focus more closely on insider trading related to changes in corporate control, mergers and acquisitions, restructurings and major contracts.
“Regulators are likely to intensify scrutiny of statutory insiders, ‘shadow accounts’, closely connected persons and sophisticated trading structures designed to evade oversight, while making greater use of big data and account linkage analysis to enhance their ability to detect and prosecute insider trading,” he said.
