China Cracks Down on Illegal Cross-Border Stock Trading; Investors Seek Alternatives
China's securities regulator has cracked down on illegal cross-border operations by overseas brokerages, fining Futu and others. Investors are now seeking alternative routes.
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- 📰 Published: May 26, 2026 at 17:13
- 🔍 Collected: May 26, 2026 at 17:31 (18 min after Published)
- 🤖 AI Analyzed: May 31, 2026 at 19:53 (122h 22m after Collected)
(Central News Agency, Taipei, 26th) The China Securities Regulatory Commission (CSRC) announced on the 22nd that it would regulate illegal cross-border business activities by overseas brokerages, imposing heavy fines on three companies, including Futu, for illegally conducting securities business within China. Bloomberg reported today that following the incident, Chinese investors are scrambling to find other ways to trade stocks across borders.
According to the "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities" released by the CSRC on the 22nd, during a two-year transition period, existing investors can only perform sell operations and withdraw funds from their accounts at relevant brokerages; buying and depositing funds are prohibited.
Bloomberg reported that according to estimates by CITIC Securities, the CSRC's action could affect up to HK$250 billion (approximately NT$1 trillion) in assets in Hong Kong, with Futu accounting for about HK$150 billion to HK$180 billion. Data compiled by Bloomberg shows that Futu underwrote 30 Hong Kong IPOs in 2026, more than any other bank.
According to an index compiled by Bloomberg Intelligence, about US$1 trillion in "hot money" flowed out of China in 2025, the largest capital outflow since records began in 2006.
Daisy Qin, an investor in Chengdu, said she opened an account with Futu in 2025 using a friend's address in Hong Kong to subscribe to Hong Kong IPOs. Over the past weekend, she hurriedly contacted other brokerages but found that the threshold for opening an account had been raised.
Daisy Qin said some people are preparing to open accounts with brokerages in Singapore or the United States, but she has no plans to open new accounts and intends to sell stocks worth 2 million yuan (approximately NT$9.26 million).
The report stated that some investors have begun to transfer overseas stock trading to institutions that allow cross-border transactions, such as the Bank of China (Hong Kong) or HSBC. Some investors noted that banks have always been an option for Chinese investors for cross-border investment, but banks charge higher fees and are less efficient, making them less attractive than brokerages like Futu. However, banks have now become another option.
According to the "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities" released by the CSRC on the 22nd, during a two-year transition period, existing investors can only perform sell operations and withdraw funds from their accounts at relevant brokerages; buying and depositing funds are prohibited.
Bloomberg reported that according to estimates by CITIC Securities, the CSRC's action could affect up to HK$250 billion (approximately NT$1 trillion) in assets in Hong Kong, with Futu accounting for about HK$150 billion to HK$180 billion. Data compiled by Bloomberg shows that Futu underwrote 30 Hong Kong IPOs in 2026, more than any other bank.
According to an index compiled by Bloomberg Intelligence, about US$1 trillion in "hot money" flowed out of China in 2025, the largest capital outflow since records began in 2006.
Daisy Qin, an investor in Chengdu, said she opened an account with Futu in 2025 using a friend's address in Hong Kong to subscribe to Hong Kong IPOs. Over the past weekend, she hurriedly contacted other brokerages but found that the threshold for opening an account had been raised.
Daisy Qin said some people are preparing to open accounts with brokerages in Singapore or the United States, but she has no plans to open new accounts and intends to sell stocks worth 2 million yuan (approximately NT$9.26 million).
The report stated that some investors have begun to transfer overseas stock trading to institutions that allow cross-border transactions, such as the Bank of China (Hong Kong) or HSBC. Some investors noted that banks have always been an option for Chinese investors for cross-border investment, but banks charge higher fees and are less efficient, making them less attractive than brokerages like Futu. However, banks have now become another option.
FAQ
Impact on Taiwanese investors?
Direct impact is limited, but tightening capital controls in the Chinese market may affect liquidity in the broader Asian financial market.