China cracks down on Tiger, Futu and Long Bridge for illegal cross-border stock trading
ADRs of Tiger Brokers’ owner and Futu’s US-listed shares plunge after the suspension of their stockbroking businesses on the mainland
China’s securities regulator has penalised Tiger Brokers and Futu Securities International for illegally offering domestic investors access to overseas securities trading, in a move to clean up market misconduct and crack down on illicit outflows that may threaten financial stability.
The two brokerages, along with Long Bridge Securities, would have their ill-gotten gains confiscated and face further punishments, the China Securities Regulatory Commission (CSRC) said in a statement on Friday.
The three companies promoted securities trading and handled orders in mainland China without regulatory approval, in violation of the Securities Law, according to the statement.
On the same day, China’s top regulators pledged to root out the illegal stockbroking business within two years, and Hong Kong’s Securities and Futures Commission (SFC) also stepped up regulatory scrutiny, requiring licensed brokerages to conduct internal checks to ensure no falsified documents or materials were used in account openings.
“Such illegal cross-border business operations have disrupted the market order and should be subjected to a heavy crackdown,” the CSRC said.
“Going forward, we will continue to crack down on the illegal stockbroking business operated by overseas institutions domestically to fully keep order and maintain the stability of the capital market.”