On May 22nd, the China Securities Regulatory Commission (CSRC) announced that it has recently launched investigations and issued administrative penalties in accordance with the law against Tiger Brokers (NZ) Limited (hereinafter referred to as "Tiger"), Futu Securities International (Hong Kong) Limited (hereinafter referred to as "Futu"), and Changqiao Securities (Hong Kong) Limited (hereinafter referred to as "Changqiao") for their illegal operation of securities business in China.

The China Securities Regulatory Commission stated that the relevant entities of Tiger, Futu, and Changqiao, both domestically and internationally, engaged in securities trading marketing and promotion, processing trading instructions, and other related securities business services within the country without approval and without obtaining licenses for securities brokerage business and securities margin trading and short selling business, and obtained related profits, which violated Article 120 of the Securities Law and constituted illegal operation of securities business.

For the illegal cross-border business activities of the above-mentioned institutions, the China Securities Regulatory Commission intends to decide to confiscate all illegal gains of domestic and foreign entities related to Tiger, Futu, and Changqiao, and impose severe penalties in accordance with the law. The administrative penalty to be imposed on the parties shall have the right to make statements, defend themselves, and request a hearing. After fully listening to the opinions of the parties, the administrative penalty decision shall be made in accordance with the law.

Affected by this news, the US stocks of Futu and Tiger experienced a crash style decline before the market opened. As of 18:00 Beijing time on May 22, both Tiger and Futu US stocks have experienced pre-market declines of over 35%.

On May 22nd, Futu responded on its app Futu Niu Niu that the company will strictly follow the latest regulatory guidelines and assist mainland stock investors in responding in an orderly and proper manner, ensuring the safety of customer property and maintaining market stability. The company currently does not have a detailed timetable or specific plan, and will be notified once the regulatory details are fully clarified. Futu Niuniu also stated that the company had previously completely stopped opening accounts for mainland identity applicants. As of the end of the first quarter of 2026, the proportion of the company's mainland Chinese asset customers to the total number of asset customers in the group has decreased to 13%, and the number of overseas asset customers continues to rise.

On the same day, Changqiao Securities also responded that it will strictly implement rectification in accordance with regulatory requirements and promote relevant arrangements in accordance with the law and regulations. Changqiao Securities also stated that its Hong Kong licensed entities are regulated by overseas regulatory agencies, and the company will provide normal services to customers as required. Customers can trade and withdraw funds normally, and account services will not be affected temporarily.

The institutions involved have been named multiple times

In 2025, the Hong Kong stock market will be active, and the trend of "buying new products" will continue. The performance of Futu and Tiger has also skyrocketed. According to Wind data, the total revenue of Futu in 2025 is 11.936 billion yuan, a year-on-year increase of 68.11%; The total revenue of Tiger was 4.185 billion yuan, a year-on-year increase of 56.32%.

According to annual report data, as of the end of 2025, the registered users of Futu Niuniu and Moomoo applications under Futu reached 29.18 million, a year-on-year increase of 16%, and the total customer assets were HKD 1.23 trillion, a year-on-year increase of 65%. During the same period, the total assets of Tiger Securities' clients reached 60.8 billion US dollars, a year-on-year increase of 45.7%, reaching a historic high.

In fact, the China Securities Regulatory Commission has repeatedly clarified the illegal business activities of overseas securities firms such as Tiger, Futu, and Changqiao in China.

On July 26, 2016, the official website of the China Securities Regulatory Commission (CSRC) announced that websites such as Tiger and Futu, as well as mobile clients, provided overseas securities trading services for the US and Hong Kong stocks. The CSRC said that domestic investors participate in overseas securities market transactions through the platform websites or mobile clients of domestic Internet companies. Since there is no corresponding legal protection, and the securities investment accounts and funds are overseas, once a dispute occurs, investors' rights and interests will not be effectively protected.

On December 30, 2022, the China Securities Regulatory Commission (CSRC) lawfully carried out rectification work on illegal cross-border operations of overseas securities firms such as Futu and Tiger, banned incremental illegal business activities, prohibited them from attracting domestic investors, developing new domestic customers, opening new accounts, and properly handling existing business.

In May 2023, Tiger and Futu announced on their official websites that they would remove the Tiger International app and Futu Niu Niu app from their online app stores in China. The adjustment will not affect the normal use of the apps by existing customers.

On June 13, 2025, Changqiao announced that the official website has completely stopped the account opening form of users in Chinese Mainland through stock certificate. At present, the stock certificate is not acceptable for opening accounts. Customers in Chinese Mainland can only open accounts for those who actually work/live abroad. Existing stock users in Chinese Mainland can continue to use the Long Bridge client for investment transactions, and relevant services and businesses will not be affected in any way.

New regulations on illegal cross-border securities rectification have been implemented

On May 22, the China Securities Regulatory Commission announced that recently, with the approval of the State Council, eight departments including the China Securities Regulatory Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the State Administration for Financial Regulation, the Cyberspace Administration of China, and the State Administration of Foreign Exchange jointly issued the "Implementation Plan for Comprehensive Rectification of Illegal Cross border Securities and Futures Fund Operation Activities" (hereinafter referred to as the "Plan").

The plan specifies that the measures to ban illegal cross-border business activities include prohibiting overseas institutions from conducting marketing and solicitation activities related to securities and futures fund business within the country, providing relevant account opening, processing trading instructions, fund transfer and other trading services. Prohibit domestic entities from assisting overseas institutions in illegal marketing and trading services, as well as providing them with website, trading software development and operation, customer service, etc.

The head of the relevant department of the China Securities Regulatory Commission stated that it is prohibited for overseas institutions to illegally carry out marketing and solicitation activities related to securities and futures fund business in China, including operating websites and trading software, publishing marketing information, pushing investment information, conducting rebate marketing activities, promoting and inducing the subscription of overseas stocks, etc. Internet platforms are prohibited from providing marketing publicity, securities and futures account opening channels and other facilities for illegal cross-border operations of overseas institutions in China. Prohibit online self media accounts from publishing relevant promotional and traffic generating information within the country.

The plan states that the China Securities Regulatory Commission will hold talks with relevant departments regarding illegal cross-border operations of overseas institutions, urge them to formulate rectification work plans, clarify the progress arrangements for stopping relevant business operations, and conduct investigations on relevant entities; The State Administration for Financial Regulation will hold talks with domestic banks that provide account services. The Office will clean up and dispose relevant non information and accounts in a timely manner, and seriously interview and punish Internet platforms and We Media with serious problems; The telecommunications regulatory authority will take down or shut down the domestic websites and apps involved; The market supervision department will crack down on illegal advertisements; The Ministry of Public Security will initiate investigations into individuals suspected of committing crimes.

In terms of clearing existing businesses, the plan sets a 2-year centralized rectification period, during which overseas institutions are prohibited from illegally providing services such as buying transactions and transferring funds to existing investors in China. Only one-way selling transactions and transferring funds are allowed. After the completion of the centralized rectification period, overseas institutions will comprehensively shut down domestic websites, trading software, and supporting services, and prohibit illegal provision of trading and other services to existing investors in China.

Tian Lihui, a finance professor at Nankai University, stated that investors conducting overseas investments through illegal channels will find it difficult to obtain sufficient protection and relief from domestic laws for disputes or losses arising from such activities. The main starting point of this rectification work is to protect the legitimate rights and interests of investors by cracking down on illegal business activities, and guide domestic investors to carry out overseas investment through legal channels such as the Hong Kong Stock Connect, Qualified Domestic Institutional Investors (QDII), and Cross border Wealth Management Connect.