China probes 'illegal' brokers in cross-border trade crackdown including Tiger Brokers
Regulators say the brokers had conducted securities-related business in China "without obtaining the necessary approvals or licences".
The logo of Tiger Brokers is displayed at its office in Hong Kong, China, on Jun 2, 2025. (Photo: REUTERS/Tyrone Siu)
BEIJING: China's market regulator announced a sweeping investigation on Friday (May 22) 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 the semi-autonomous city Hong Kong, and some brokers have been able to legally operate there, attracting investors from mainland China to open trading accounts in the Chinese finance hub.
Authorities have sought to regulate the loophole in recent years, and in 2022 barred private Chinese investors from opening accounts with such brokers.
The China Securities Regulatory Commission (CSRC) said on Friday it will probe and impose penalties on Hong Kong-registered brokers Futu and Longbridge, as well as New Zealand-registered Tiger Brokers.
Regulators said the brokers had conducted securities-related business in China "without obtaining the necessary approvals or licences", violating China's securities law.
The CSRC said in a separate statement Friday it will join forces with seven other bodies, including the Ministry of Public Security and the People's Bank of China, to carry out a two-year campaign targeting illegal cross-border securities activities.
The campaign aims to "completely eradicate the illegal cross-border operations of overseas securities, futures and fund management institutions", it said.
Futu, which owns online brokerage Moomoo, said that it would "actively embrace and respond to the guidance issued by regulatory authorities in both jurisdictions".
Futu "has already ceased opening accounts for applicants with mainland Chinese identities ... has consistently engaged in active dialogue with regulatory authorities and complied with their rectification requirements", it said in a statement.
Chinese investors accounted for about 13 per cent of the group's total client base, it added.
Chinese authorities' aim "is to gain full control of capital outflows, and to block any loopholes of these illegal activities", Kelvin Lam, a China-focused economist at Pantheon Macroeconomics, told AFP.
"What China is trying to do at the moment is to make sure no overseas branches of these companies ... take funds out of Chinese investors and help them to invest overseas," Lam said.
Hong Kong cross-border brokers have operated in a regulatory grey zone until now, he said, but authorities are seeking to fully stem the flow of Chinese investment out of the country.
"Rather than worrying the fact of capital leaving China illegally, the aim of Chinese authorities is to seek full control of the situation rather than anything else," Lam said.
