Chinese regulators have tightened one of the remaining channels for gaining exposure to overseas assets through derivatives, the latest sign that authorities are continuing efforts to close regulatory loopholes and curb domestic investors’ access to higher-risk offshore markets.

Rather than launching another high-profile crackdown like last month’s action against unlicensed offshore brokers, including Futu and Tiger Brokers, regulators have instead targeted total return swaps (TRS) through so-called “window guidance” – verbal instructions conveyed to domestic brokerages on Tuesday evening, according to people familiar with the matter.

Brokerages, which often work with private funds to provide such products, were instructed to suspend any expansion of offshore-related portfolios, including new TRS contracts and increases in the size of existing mandates, one person said.

Existing portfolios linked to offshore assets are not subject to immediate liquidation.

“The move is a direct response to the massive inflow of high-net-worth capital into surging global technology stocks, including US, Japanese and South Korean equities,” the person said.

A TRS is a derivative contract in which one party receives a fixed or floating payment stream, while the other receives the total return of a reference asset, such as an equity index, a basket of shares, loans or bonds.

Because the structure does not involve the direct transfer of capital across borders, TRS has become an increasingly popular route for mainland investors seeking exposure to overseas assets as other investment channels have narrowed, analysts said.