China’s securities regulators just fired the loudest warning shot at offshore brokers in a generation. The China Securities Regulatory Commission, working alongside seven other government agencies, launched an enforcement campaign on May 22 targeting unauthorized cross-border securities trading, and the numbers involved are staggering.
The CSRC specifically named three firms: Futu Securities International (Hong Kong) Limited, Tiger Brokers (NZ) Limited, and Longbridge Securities (Hong Kong) Limited. The charge: operating without the appropriate licenses required for onshore trading. The proposed punishment: confiscation of roughly 2.3 billion yuan, about $338 million, in what regulators are calling illegal gains.
The fallout was immediate
Shares of the targeted brokers cratered over 30% in pre-market trading after the announcement.
Estimates suggest that between 570,000 and 630,000 mainland-funded accounts are sitting on these types of offshore platforms, collectively holding somewhere between $27 billion and $29 billion in assets.
