China’s CSRC penalized Tiger Brokers, Futu Holdings, and Longbridge Securities for illegal cross-border trading, imposing fines and confiscating gains, amid efforts to enforce strict capital controls.
China’s Regulatory Action
In a clear enforcement of its capital controls, China’s China Securities Regulatory Commission (CSRC) has penalized three major brokerages—Tiger Brokers, Futu Holdings, and Longbridge Securities. These firms allegedly facilitated illegal cross-border securities trading without the necessary approvals, specifically catering to mainland Chinese clients.
Implications and Market Response
The CSRC plans to confiscate illegal gains and impose significant fines, with Futu Holdings facing up to Rmb1.85 billion (about $271 million) and Tiger Brokers Rmb308 million in penalties. Following this announcement, shares of both firms saw a dramatic drop, plummeting over 40% in pre-market trading, signaling investor concern over regulatory pressures.
Commitment to Compliance
In response, Futu and Tiger Brokers have committed to complying with the new regulations, clarifying that mainland clients make up only 13% of their total assets. The CSRC’s actions exemplify China’s intensified efforts to maintain oversight in its securities market, prompting firms and investors to navigate this evolving regulatory landscape with caution.
Source : China Fines Futu and Tiger Brokers Over Illegal Cross-Border Trading