China's cross-border securities brokerage sector is undergoing a sweeping overhaul as regulators move to eliminate illegal transactions and place the industry on a more compliant and transparent development track, analysts said.
This comes after authorities unveiled a tougher rectification campaign and disclosed severe penalties against three major offshore brokerages, with people knowledgeable of the matter saying the move is aimed at maintaining market order and protecting investors' rights, instead of tightening cross-border capital flows.
Eight Chinese government departments, led by the China Securities Regulatory Commission, had issued an implementation plan to eradicate illegal cross-border securities, futures and fund business activities within two years, the CSRC said on Friday.
Under the plan, overseas institutions will be prohibited from conducting marketing and client solicitation activities, or providing account opening, trade execution and fund transfer services related to securities, futures and fund businesses in the Chinese mainland.
For existing accounts, regulators will adopt phased rectification measures during the two-year transition period, during which overseas brokerages will be barred from providing services related to new purchases or fund deposits for onshore investors, while only sell orders and fund withdrawals will be allowed.
