China to Crack Down on Offshore Brokerages' Cross-Border Operations, Plans to Confiscate Illegal Gains from 3 Firms

Central News Agency, Shanghai, May 22. The China Securities Regulatory Commission (CSRC) announced today that it will implement a two-year crackdown period to comprehensively ban illegal cross-border operations by offshore brokerages, allowing only one-way sell transactions during this time. At the same time, it named three offshore brokerages—Tiger Brokers, Futu Securities International (Hong Kong), and Longbridge Securities (Hong Kong)—and plans to confiscate all their illegal gains. According to Xinhua News Agency, the CSRC announced on the 22nd that the illegal cross-border business activities of Tiger Brokers (NZ) Limited, Futu Securities International (Hong Kong) Limited, and Longbridge Securities (Hong Kong) Limited violate China's securities, fund, and futures laws and regulations, disrupt market order, and must be resolutely cracked down upon. The report stated that in accordance with relevant regulations, the CSRC intends to confiscate all illegal gains of the relevant domestic and overseas entities of Tiger, Futu, and Longbridge, and impose severe penalties according to law. According to the Daily Economic News, following the news, the pre-market stock price of Tiger Brokers (TIGR) on the US market plummeted by 45%, and Futu Holdings plunged by over 30%. Xinhua reported that the CSRC and eight other departments recently jointly issued an "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities," which stipulates that after two years of concentrated rectification, illegal cross-border business activities by offshore securities, futures, and fund management institutions will be comprehensively banned. According to the plan, a two-year concentrated rectification period is set to clear illegal existing business. "During the concentrated rectification period, offshore institutions are prohibited from illegally providing services such as buy orders and fund transfers for existing investors in China, and only one-way sell transactions and fund withdrawals are allowed." The plan stipulates that after the concentrated rectification period expires, offshore institutions must fully shut down domestic websites, trading software, and supporting servers, and are prohibited from illegally providing services such as trading for existing investors in China. Prior to this, the CSRC launched a rectification campaign against offshore brokerages such as Futu Securities and Tiger Brokers on December 30, 2022, prohibiting them from soliciting domestic investors, developing new domestic clients, or opening new accounts. Subsequently, both brokerages removed their apps from app stores in mainland China.