China’s securities regulator said that two brokerage firms, Futu Holding and UP Fintech Holding, had engaged in illegal securities trading and would be required to take remedial action.
According to Reuters, the China Securities Regulatory Commission (CSRC) would prohibit both brokerage websites from seeking new business from mainland Chinese clients.
Futu, a business backed by Chinese technology behemoth Tencent, unexpectedly postponed its intentions to float shares on the Hong Kong Stock Exchange, citing the need to “clarify some things” with the exchange. The relocation was announced on Thursday, less than a day before the planned listing on Friday, with no more information provided.
Futu and Up Fintech (doing business as Tiger Brokers) are two prominent online brokers that provide mainland Chinese investors with access to equities listed on worldwide exchanges. Both corporations are registered in Hong Kong, as well as in a few other countries outside of China. The ‘one nation, two systems approach, on the other hand, does not extend the license scope to the mainland.
Both enterprises exist in legal limbo, as mainland Online brokerages focusing on cross-border trading are not licensed by Chinese regulations.
A Proposed Suit Against Futu and Up Fintech (Tiger Brokers)
Earlier, media sources indicated that China will take action against such internet brokers. According to a top PBOC official, “cross-border internet brokerages are driving in China without a driver’s license [and] performing unlawful financial operations.”
Futu has been working hard to expand its influence outside of China. It has obtained a digital brokerage license in Singapore and plans to expand outside the Chinese mainland. Furthermore, Tiger Brokers’ operator employs the same technique, having bought Hong Kong-based Ocean Joy Securities last year after receiving a regulatory license in Singapore. Both firms are also considering providing bitcoin services outside of China.
Furthermore, Up Fintech’s quarterly financials demonstrate the need for its services. The firm earned $55.4 million in total sales in the third quarter of 2022, up 3.6 percent from the previous quarter but down 8.8 percent year over year. Furthermore, the company’s net income fell dramatically, falling to $3.3 million from $20.5 million in the same period the previous year.
About Tiger Brokers
Tiger Brokers is an online brokerage business that offers a trading platform for buying and selling stocks, options, futures, and foreign currency. The corporation is based in Shanghai, China, and it also has offices in the United States, Singapore, and Australia. Tiger Brokers provides traders with a variety of tools and resources, including real-time market quotations, technical analysis, and instructional materials. The company also offers trading applications for iOS and Android smartphones.