China just reminded everyone who’s really in charge of its capital markets. Shares of Futu Holdings and Up Fintech Holding collapsed during US trading on May 22 after the China Securities Regulatory Commission announced penalties targeting offshore brokers that have been serving mainland Chinese clients without proper licenses.
The damage was immediate and brutal. Both FUTU and TIGR dropped between 30% and over 40% in a single session. Longbridge Securities, another offshore platform caught in the dragnet, also saw its shares plummet.
The fines and the fallout
Futu entities face proposed fines of approximately RMB 1.85 billion, roughly $271 million. Up Fintech is looking at RMB 308.1 million in fines on top of the confiscation of RMB 103.1 million in what regulators classified as illegal earnings.
The core accusation is straightforward. These platforms allegedly solicited customers in mainland China to trade securities on foreign exchanges without holding the necessary domestic licenses.
