China Warns Unlicensed Brokers Accepting Mainland Clients

Online Chinese brokerages that are licensed outside the country are facing the latest regulatory uncertainty as a central bank official said that all such platforms are operating illegally.

“Cross-border online brokerages are driving in China without a driver’s license. They’re conducting illegal financial activities,” said Sun Tianqi, Head of the Financial Stability Department of the People’s Bank of China (PBOC), while speaking at the Bund Summit in Shanghai.

Several Chinese trading platforms are operating with overseas licenses and providing services to Chinese citizens. These brokers mostly provide trading services with Hong Kong or US-listed stocks to domestic Chinese investors.

Moreover, many foreign trading platforms take clients from mainland China without holding any local license.

“Financial licenses have national boundaries,” Sun added. “Overseas institutions with only overseas licenses conducting business in mainland China are [an] illegal financial activity.”

No Broker Was Named

Though the speech does not name any such brokerages, its wrath can be seen on the stock prices of big brokerages listed on overseas exchanges.

Both Futu and UP Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term, which are listed on US Nasdaq and have major stakes on the Chinese domestic markets, are witnessing massive dumping of their shares, leading to around a 20 percent price drop after US markets opened on Thursday. Both of these brokers were already facing regulatory risks due to China’s forthcoming personal data privacy law.

Sun even pointed out that one such broker registered in the Cayman Islands has 80 percent trading clients from mainland China, while another Hong Kong-based brokerage has 55 percent clients from China.

Futu, which is regulated in the United States, Hong Kong and Singapore, even mentioned in its 2020 annual report that a large number of its clients are from mainland China. After the panic in the industry, Futu Chairman and CEO Hua Li even issued a statement saying that the company has sufficient capital and will not face any ‘Bankruptcy Bankruptcy Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Read this Term issues’.