China has launched its most aggressive crackdown on offshore brokerages, targeting platforms like Futu, Tiger Brokers, and Longbridge. Effective May 22, mainland clients can only sell existing holdings and withdraw funds; new securities purchases and deposits are banned.
Regulators aim to “completely eradicate” illegal cross-border securities activity within two years. Analysts say the move reflects Beijing’s desire to reassert control over capital flows and channel overseas investing through state-approved methods. The crackdown poses significant penalties: Futu faces fines up to 1.85 billion yuan, Tiger Brokers over 400 million yuan.
The action follows years of tolerance for what was a regulatory “grey zone.” Experts note that the rise of offshore brokerages highlights strong demand for overseas diversification amid domestic market weakness. Investor concerns hit markets, with shares of Futu and UP Fintech plunging over 30% in pre-market trading.
For now, the immediate impact may be manageable given the two-year transition period. However, the message is clear: China is tightening its grip on outbound capital, and investors seeking global diversification must look to official channels like QDII or Stock Connect. The crackdown underscores ongoing tension between Beijing’s financial opening and capital control priorities.