China to Penalize Brokerages for Cross-Border Operations; Futu Faces $8.5 Billion TWD Fine

Hong Kong-based Futu Holdings announced on the evening of the 22nd that it has received a pre-notice from Chinese regulators stating that the company will be subject to the confiscation of illegal gains and fines for conducting securities business in mainland China without authorization. The total proposed fine is approximately 1.85 billion RMB (about 8.5 billion TWD). The China Securities Regulatory Commission (CSRC) announced on the 22nd that the illegal cross-border activities of Tiger Brokers (NZ) Limited, Futu Securities International (Hong Kong), and Longbridge Securities (Hong Kong) violated Chinese securities, fund, and futures laws, disrupting market order. The CSRC stated that certain Futu entities in mainland China and Hong Kong conducted unauthorized business, violating the Securities Law. The regulator plans to impose a personal fine of 1.25 million RMB on founder and CEO Li Hua. Following the announcement, Futu's Nasdaq-listed shares plunged 34%, while Tiger Brokers fell 30%.