China’s two leading cross-border online brokerages said they will remove their trading platforms from app stores in mainland China this week as Beijing takes a harder stance on capital flows out of the country.
Futu Holdings Ltd. and Up Fintech Holding Ltd., also known as Tiger Brokers, said Tuesday that the move was to comply with the Chinese securities regulator’s requirements on cross-border brokerage businesses. Futu’s app Futubull will be removed Friday, and Tiger Brokers’ app will be taken off on Thursday.
Shares of Futu fell as much as 13%, and Up Fintech dropped as much as 11% in pre-market trading in New York.
Futu and Up Fintech have been operating in a gray area for their mainland China businesses, allowing millions of local investors to evade capital controls to trade shares in markets such as Hong Kong and New York.
China asked the two firms to rectify “illegal” business activities in late 2022, saying they had over the years conducted cross-border securities trading business without approval from the China Securities Regulatory Commission. It followed similar criticism from a senior central bank official, who had questioned the legitimacy of online trading firms, calling their services “illegal” at least twice since 2021.
The criticism had prompted the companies to shift their focus away from the domestic market, with Tiger Brokers resorting to job cuts and Futu eyeing overseas markets to diversify its growth. Futu also abruptly postponed its Hong Kong listing less than a day before its scheduled debut last year.
The two brokerages said on Tuesday existing clients in mainland China can continue to use the app to make trades, and users outside of the country won’t be affected.
Mainland customers accounted for about 10% of Futu’s new users last year, according to an earlier estimate by Daiwa Capital Markets Hong Kong Ltd. Up Fintech had over 20% of its new funded accounts from mainland China in the third quarter last year, according to its Chairman Wu Tianhua.
--With assistance from Kiuyan Wong.
(Updates with details throughout.)
