China Moves To Shut Down Offshore Stock-Trading Channels Used By Mainland Investors
Authored by Arthur Zhang via The Epoch Times,
China’s securities regulator has opened enforcement actions against Futu, Tiger Brokers, and Longbridge Securities, accusing the offshore online brokerages of illegally serving mainland investors who used the platforms to trade U.S. and Hong Kong stocks.
The China Securities Regulatory Commission (CSRC) said on May 22 that it had opened investigations and issued administrative penalty pre-notification letters against Tiger Brokers (NZ) Limited, Futu Securities International (Hong Kong) Limited, Longbridge Securities (Hong Kong) Limited, and their related onshore and offshore entities.
The regulator said the firms conducted securities brokerage and margin-financing services in mainland China without approval and also “illegally” engaged in public-fund sales and futures brokerage activities.
The action was announced alongside a broader campaign by eight Chinese agencies to “comprehensively rectify” cross-border securities, futures, and fund operations.
The agencies involved are the CSRC, Ministry of Industry and Information Technology, Ministry of Public Security, People’s Bank of China, State Administration for Market Regulation, National Financial Regulatory Administration, Cyberspace Administration of China, and State Administration of Foreign Exchange.
2-Year Wind Down
The eight-agency implementation plan sets a two-year rectification period to phase out unauthorized mainland-facing services by offshore securities, futures, and fund institutions. During that period, offshore firms are barred from providing existing mainland investors with buy orders or fund-inflow services; only one-way selling and fund withdrawals are permitted. After the period ends, the firms must shut down mainland websites, trading software, and supporting servers.
The CSRC said investor property safety would not be affected by the rectification campaign and that affected overseas institutions must communicate with mainland investors and arrange account handling.
The policy effectively turns affected mainland-facing accounts into exit-only vehicles—investors can sell positions and withdraw funds, but cannot buy new purchases or add funds. It does not amount to confiscation of client assets, but it closes a private, app-based route that had allowed Chinese retail investors to trade overseas securities more directly than through Beijing-approved channels.
The implementation plan also extends beyond the brokerages themselves. It targets offshore institutions, mainland affiliates and partners, intermediaries, internet platforms, apps, and online self-media accounts that publish account-opening tutorials or other promotional materials for unauthorized cross-border trading.
Futu, Tiger Disclose Penalties
Futu Holdings, which is listed on Nasdaq, said it received a notice of investigation and an administrative penalty pre-notification letter from the CSRC and its Shenzhen bureau. The company said the regulator proposed ordering related entities to rectify or cease the activities, confiscate illegal gains, and impose fines totaling about 1.85 billion yuan, or about $271 million. The CSRC also proposed a personal fine of 1.25 million yuan, or about $183,575, against Futu founder and CEO Li Hua.
Futu said the proposed penalty remains subject to further proceedings and final determination by the CSRC. The company said it is entitled to submit statements, present defenses, and request a hearing. It also said mainland Chinese accounts accounted for about 13 percent of total funded accounts at the end of the first quarter of 2026, while business operations outside mainland China remain normal.
UP Fintech Holding, the Nasdaq-listed parent of Tiger Brokers, said in a Form 6-K exhibit that certain subsidiaries received notices from the CSRC’s Beijing Bureau on May 22. The company said the bureau accused the subsidiaries of conducting unlicensed cross-border securities business and fund and futures activities in mainland China. UP Fintech said the bureau imposed administrative penalties totaling about 308.1 million yuan (about $45.34 million) and confiscation of income totaling about 103.1 million yuan (about $15.17 million). It also said CEO and controlling person Wu Tianhua received a warning and a 1.25 million yuan penalty (about $183,965).
UP Fintech said retail client assets in mainland China under its consolidated accounts represented about 10 percent of total client assets at the end of 2025. The company said it accepts the penalty, is cooperating with regulators, and will implement required rectification measures.
The CSRC stated it intends to confiscate all “illegal gains” from Tiger, Futu, Longbridge, and related entities, but its public announcement did not disclose a combined illegal-income figure for all three firms.
The announcement triggered sharp selling in Futu and UP Fintech shares. Futu closed at $89.76, down $34.09, or 27.5 percent, after trading as low as $73.02 intraday. UP Fintech closed at $4.36, down $1.49, or 25.5 percent, after trading as low as $3.18 intraday.
Years in the Making
The May 22 enforcement action marks an escalation of a campaign that began more than three years ago. In its official Q&A, the CSRC said it began rectifying cross-border operations by offshore institutions on Dec. 30, 2022, to bar such institutions from “illegally” soliciting mainland investors and opening new accounts for them.
The latest plan expands the campaign from individual enforcement to full-chain governance. The CSRC said the new requirements cover marketing, account opening, processing trading instructions, fund transfers, internet platforms, apps, and independent content creators that guide mainland investors into unauthorized offshore accounts.
The regulator said offshore institutions and related mainland entities “violate Chinese law” if they conduct securities, futures, or fund business in mainland China without state approval, whether directly or through affiliates and partners. It also said related violations involving cybersecurity, personal information protection, anti-money laundering, and foreign-exchange rules are included in the state’s “rectification campaign.”
Tech-Linked Brokers in the Crosshairs
Futu, Tiger, and Longbridge built their appeal by offering digital brokerage platforms that made it easier for Chinese-speaking retail investors to trade U.S. and Hong Kong securities.
Futu’s founder, Li Hua, was a former Tencent employee, and Tencent has been a major shareholder of the digital brokerage firm. Tiger Brokers was founded by Wu Tianhua, a former NetEase executive, and has counted Xiaomi as a strategic investor. Longbridge is a newer online brokerage with a founding and investor background often associated with China’s internet sector, according to Chinese state media.
The official allegation by the CSRC did not frame the action as a campaign against those technology companies. Still, the cases fit a broader pattern in which Beijing has brought app-based financial activity under tighter state supervision, especially where online platforms touch securities trading, fund flows, investor data, and cross-border transactions.
Capital-Control Signal
The CSRC described the campaign as a move to protect investors, maintain financial-market order, and guide outbound investment through lawful channels. In its Q&A, the regulator said investors can use routes such as Hong Kong Stock Connect, Qualified Domestic Institutional Investor (QDII) products, and Cross-boundary Wealth Management Connect (Cross-boundary WMC) for overseas investment.
Those channels are more limited than direct app-based trading in U.S. and Hong Kong stocks. Stock Connect covers eligible Hong Kong-listed securities rather than the full U.S. market. QDII products are managed through approved institutions and quotas. Cross-boundary WMC is limited by geography, product scope, and eligibility rules.
That makes the policy more than a licensing dispute. Beijing is not banning all offshore investment by mainland residents, but it is closing a private route that made foreign securities more accessible to ordinary investors. The structure of the rule pushes capital back toward channels that regulators can monitor, limit, and adjust.
On Chinese social media, some users reacted with frustration, saying the move narrows ordinary households’ ability to diversify outside China’s domestic markets. Others doubted that money previously invested through offshore brokers could be redirected toward mainland A-shares.
There is a broader concern among retail investors that Beijing is reducing access to overseas assets while China’s domestic stock market continues to struggle with investor confidence.