On Friday, the CSRC named Tiger Brokers, Futu Securities, and Longbridge Securities for severely violating regulations through illegal cross-border operations. The regulator plans to confiscate all illegal earnings from these entities and impose severe penalties, continuing a regulatory tightening direction that began in late 2022.
The CSRC, alongside seven other government departments, issued a comprehensive rectification plan approved by the State Council, according to Xinhua News Agency. The initiative targets overseas institutions that use domestic affiliates, websites, or mobile applications to solicit clients without regulatory approval.
Under the new plan, a two-year transition period will be enforced. During this time, overseas brokerages are restricted to providing “sell-only and fund withdrawal” services for existing domestic clients, with new securities purchases and inbound fund transfers strictly prohibited.
Once the rectification period ends, these institutions must permanently shut down their domestic websites, trading software, and servers to halt all illegal trading services within the country.
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Addressing market concerns regarding investor rights, the CSRC emphasised that the assets of existing investors remain secure. The commission instructed that overseas institutions must ensure proper client communication and manage account closures responsibly.
The crackdown focuses exclusively on unauthorised cross-border operations. Domestic investors retain access to legitimate overseas investment channels, including the Stock Connect programmes, the Qualified Domestic Institutional Investor (QDII) scheme, and the Cross-boundary Wealth Management Connect.
As the policy allows for a phased transition and does not restrict services for investors physically located abroad, authorities expect the overall impact on overseas financial markets to remain manageable.
