China’s market regulator announced a sweeping investigation on Friday against three major brokers running cross-border trading, as it launched a two-year crackdown on investment leaving the country.
China does not allow private individuals to directly invest in overseas markets, requiring them to trade assets only through approved third-party channels. However, regulations differ in Hong Kong, and some brokers have operated there legally, attracting investors from mainland China.
The China Securities Regulatory Commission (CSRC) said it will probe and impose penalties on Hong Kong-registered brokers Futu and Longbridge, as well as New Zealand-registered Tiger Brokers, for conducting securities-related business without necessary approvals.
The CSRC will join forces with seven other bodies, including the Ministry of Public Security and the People’s Bank of China, in a two-year campaign targeting illegal cross-border securities activities, aiming to completely eradicate such operations.
Futu, which owns online brokerage Moomoo, said it will embrace the guidance and has already ceased opening accounts for applicants with mainland Chinese identities.