On 22 May, the China Securities Regulatory Commission (中国证监会, CSRC) announced it was launching investigations into three of the country’s largest internet brokerages, and fining them a total of 2.3 billion yuan (around $320 million dollars).
The companies are Futu (富途), Tiger Trade (老虎), and Longbridge (长桥). When the fines were announced, Futu’s US-listed shares dropped 28% and Tiger’s fell 25%.
These online brokerages allow mainland Chinese retail investors to trade overseas stocks, including Hong Kong and US-listed shares, directly and easily via an app. This is something that is otherwise tightly restricted inside China, with the likes of Futu operating in what is often described as a “grey area” (灰色地带).
By the end of 2025, more than five million mainland retail investors (散户) had opened offshore accounts to trade Hong Kong and US stocks, with between 200 and 400 billion yuan (around 28 to 56 billion US dollars) sitting in those accounts.
As part of the crackdown, all three brokerages are now barred from taking on new mainland clients. Existing account holders have a two-year window to withdraw cash and sell their positions, and they are barred from adding funds or buying more stocks. After that, these services will be closed down for good.
On the same day as the CSRC announcement, Hong Kong introduced the toughest cross-border account-opening rules in its history, making it much harder for mainlanders to open bank accounts in the jurisdiction. Anyone opening a new account must now sign a declaration to confirm their money is legal overseas income.
As one commentator put it:
“This regulatory storm also dealt a crushing blow to mainland retail investors.”
这次监管风暴，对内地散户也是当头一棒。
The effects were felt on the ground in Hong Kong almost immediately. Haiphong Road (海防道) in Tsim Sha Tsui is a street usually bustling with brokers pitching trading accounts to passers-by, most of them mainland tourists.
From small promotional vans, they yell slogans like “zero interest, zero fees” (零利息，零手续费) and “get rich trading Hong Kong and US stocks” (炒港美股发大财) to draw in new clients and often signing them up on the spot.
But shortly after the announcement, the vans were gone, Haiphong Road had fallen silent, and only a few lonely-looking agents with shopfronts were left on the street.
Related
China’s “investment craze in overseas stocks” (出海炒股热) can be traced back to 2014.
That was when the Shanghai–Hong Kong Stock Connect (沪港通) and Shenzhen–Hong Kong Stock Connect (深港通) were launched, which made it easier for investors inside China to access the Hong Kong stock market, and vice versa.
China’s A-share market was also surging at that time, retail investor enthusiasm was at a high, and Chinese internet companies were shining on the Hong Kong and US stock markets.
So large numbers of mainland retail investors suddenly developed an appetite for investing in overseas stocks. But strict regulations meant doing so wasn’t easy. Sensing the demand, a wave of new online brokerages set up in Hong Kong.
One of the first was founded by Leaf Li (李华), who had previously worked at Tencent on its QQ instant messaging service, and was the tech company’s 18th employee. He launched an app called Futu Niuniu (富途牛牛) with an interface similar to the stock-trading apps used domestically. But inside the app, users could trade US and Hong Kong stocks seamlessly.
That app became Futu, which eventually listed on the Nasdaq Exchange in March 2019.
The model caught on fast, and Tiger, Longbridge, and other service providers soon followed. They all held overseas brokerage licences for account-opening and overseas trading services to mainland retail investors. But none of them held mainland financial licences, which is the grey area we mentioned earlier.
At its peak, Futu alone had nearly 30 million registered users, with more than 60% of its revenue coming from investors inside China.
In 2021, regulators designated these services as “illegal financial activity” (非法金融活动), summoning executives from three firms for talks. By the end of 2022, regulators halted new account openings, and the Futu and Tiger apps were pulled from app stores.
But demand for Futu, Tiger, and Longbridge services didn’t disappear. It simply moved underground. Independent agents and middlemen, like those on Haiphong Road in Hong Kong, started funnelling mainland clients to these offshore brokers covertly. They did this by touting account sign-ups on the streets, or via social media accounts, forming what regulators now describe as a “grey-market supply chain” (灰色产业链).
Which is what brings us to this latest move in the crackdown on these companies.
The earlier, softer measures didn’t work so this time the authorities have gone after the brokerages themselves, including their existing mainland customers.
As we’ve seen before in education, gaming, and livestream e-commerce, when Beijing decides to crush an entire business model…
It can do it, and does.
So that’s what we’re exploring this week!
Favourite Five
1. 招揽 zhāo lǎn
solicit, recruit
境外证券期货基金经营机构未经批准，利用境内关联或合作主体在境内招揽客户 - Offshore securities, futures and fund management entities have been found soliciting domestic clients through local partners without regulatory approval. [1]
2. 倒查 dào chá
trace back, investigate retrospectively
关闭开户时曾使用可疑或伪造文件的投资账户，倒查至2023年1月 - Investment accounts opened using suspicious or forged documents will be closed under a look-back review from January 2023. [2]
3. 港股通 gǎng gǔ tōng
stock connect program for hong kong stocks
如果你想继续投资港股，只能走港股通，不过有50万的门槛 - If you want to continue investing in Hong Kong stocks, you have to go through the Stock Connect program with a minimum asset requirement of 500,000 yuan. [3]
4. 死灰复燃 sǐ huī fù rán
revive after being extinguished, make a comeback
有些平台通过伪造存量投资者证明等方式，暗中继续给境内客户开户，出现了“死灰复燃”的迹象 - Illegal trading is making a comeback, as some platforms quietly continue to open accounts for domestic clients by falsifying proof of trading records. [3]
5. 当头一棒 dāng tóu yí bàng
a crushing blow, a rude awakening
这次监管风暴，对内地散户也是当头一棒 - This regulatory crackdown also dealt a crushing blow to mainland retail investors. [2]
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Consuming the Conversation
Useful words
6. 平仓 píng cāng
close a position, liquidate a position
融资仓位因为不能追加保证金也可能面临平仓 - Leveraged positions may also face forced liquidation if investors fail to meet margin calls. [3]
Related:
加仓 jiā cāng – increase a position, buy
清仓 qīng cāng – clear out a position, sell
7. 限购 xiàn gòu
purchase restriction, buying limit
因为美股太热，QDII基金的外汇额度有限，部分热门基金目前处在限购状态 - Due to the demand for US stocks and the limited QDII foreign exchange quota, some popular funds are currently subject to subscription caps. [3]
8. 暴跌 bào diē
plunge, crash
老虎和富途在美国股市的股价应声暴跌 - The share prices of Tiger Trade and Futu plunged in the U.S. stock market in response. [1]
9. 牛市 niú shì
bull market
在这一轮高科技牛市下，英伟达、谷歌等公司股价持续大涨 - Driven by the current tech-led bull market, companies like Nvidia and Google have seen their stock prices continue to surge. [1]
10. 走势 zǒu shì
trend, movement
这些指数基金过去一年的涨幅大概为38%，基本复制了纳斯达克指数的走势 - These index funds have seen returns of roughly 38% over the past year, which pretty much tracks the performance of Nasdaq-100. [1]
11. 丝滑 sī huá
smooth, seamless
流程很简单，入境后找家银行排队即可丝滑开卡 - It’s very straightforward: just head to a bank once you arrive, wait in line, and you’ll have your card in no time. [2]
12. 展业 zhǎn yè
conduct business, carry out operations
这批券商没有境内金融牌照，属于无牌展业 - These brokerages do not hold the required onshore financial licenses. As such, they are engaging in unlicensed business activities. [2]
