In recent years, publicly offered index funds have developed rapidly and have become important asset allocation instruments and important participants in the capital market. At the same time, some problems are also coming out on operational aspects of index funds, which need to be identified as soon as possible. For the purposes of further standardizing investment operations of index funds, better optimizing the attributes of asset allocation tools of index funds, promoting more medium-term and long-term funds to enter into the market, and protecting the legitimate rights and interests of investors, on the basis of learning from the regulatory experience of overseas mature markets, China Securities Regulatory Commission ("CSRC") has promulgated the Guidelines on Operation of Public Securities Investment Funds No. 3 — Guidelines on Index Funds (Draft for Comment) ("Guidelines on Index Funds").

Guidelines on Index Funds consist of 13 articles, mainly regulating the professional competence of managers, the quality of underlying indices, the investment operation of index funds, the special regulatory requirements for exchange traded funds (ETFs) and feeder funds, etc.

On July 31, 2020, Shanghai Stock Exchange ("SSE") and Shenzhen Stock Exchange ("SZSE") promulgated the Guidelines of the Shanghai Stock Exchange for the Development of Index Securities Investment Funds (Draft for Comment) and the Guidelines of the Shenzhen Stock Exchange for the Development of Index Securities Investment Funds (Draft for Comment) respectively to further clarify the specific regulatory requirements for index funds, which refer to ETFs and index LOFs listed and traded on SSE and SZSE and operated by means of complete replication or sampling replication in compliance with the Guidelines on Index Funds.