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The Chinese government has implemented a ban on foreign institutions engaging in marketing and solicitation activities related to securities, futures, and fund businesses within its borders. Additionally, efforts are underway to impose administrative penalties on three brokers found operating illegally.
Foreign brokerage firms are now barred from offering services such as account opening, executing transaction instructions, and transferring funds, according to a joint announcement from the China Securities Regulatory Commission, the People’s Bank of China, the State Administration of Foreign Exchange, and five other government agencies made on May 22. A transition period of two years has been established, during which current investors can sell their holdings unilaterally.
On the same day, the securities regulator revealed that Tiger Brokers, Futu Securities, and Longbridge Securities lack valid licenses to operate securities brokerage or margin financing services but have nonetheless engaged in marketing, promotion, and order processing for securities within China for profit.
“This policy intensifies previous efforts to crack down on illegal cross-border operations,” explained Zhao Ran, a senior analyst at a financial research firm. “The focus has shifted from restricting new activities to addressing existing violations. It signals a clear intention to heavily enforce regulations against illegal international financial activities.”
The securities authority intends to confiscate all illegal earnings made by the three firms and their related entities both within China and overseas, enforcing strict penalties. Tiger Brokers and Futu Securities have stated their cooperation with authorities.
Tiger Brokers has faced fines and confiscations exceeding CNY 400 million (around USD 59 million), while CEO Wu Tianhua received a warning and a fine of CNY 1.25 million (approximately USD 184,000). The firm indicated that about 10 percent of its total client assets are held by individual mainland Chinese clients.
Futu Holdings has been fined CNY 1.9 billion (about USD 280 million), with its founder and CEO Li Hua fined CNY 1.25 million. Mainland clients’ assets account for roughly 13 percent of its client base.
Longbridge Securities has not yet released details of its penalties.
Following these developments, shares of Futu dropped over 27 percent to USD 89.76 on May 22, while Tiger Brokers’ stock fell more than 25 percent to USD 4.36.
Previously, on December 30, 2022, the securities regulator ordered Futu Securities and Tiger Brokers to correct their operations after discovering that both firms had conducted cross-border securities transactions targeting domestic investors without proper approval, violating securities laws and regulations.
While the new rules outright ban cross-border brokers from operating within China, industry insiders note that the measures are relatively moderate and focus on investor protection.
“Existing clients are allowed to sell their holdings independently over the next two years rather than being forced to liquidate, which helps achieve the goal of preventing overseas transactions but also safeguards investors’ cross-border assets,” said a source from a brokerage in Hong Kong. “This approach indicates regulators want to establish clear rules rather than target individual investors.”
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