China Shuts Down the Last Route for Retail Investors to Buy US Stocks
China’s securities watchdog, the China Securities Regulatory Commission (CSRC), announced on May 22 that it would confiscate all proceeds it deemed unlawfully earned by three of the country’s best-known cross-border online brokerages: Tiger Brokers, incorporated in New Zealand; Futu Securities International, based in Hong Kong; and Longbridge Securities, also Hong Kong-based. The regulator accused all three of conducting unauthorized cross-border business operations in violation of Chinese securities, fund, and futures law, and of disrupting market order.
According to a press release, Futu Holdings and Tiger International both disclosed on the evening of May 22 that they had received advance notice of administrative penalties from the CSRC and its local bureaus. The combined proposed fines and asset forfeitures against the two companies exceeded RMB 2.2 billion, approximately US$300 million. The founders of both firms were also hit with personal financial penalties.
The market reacted immediately. Futu Holdings, listed on the Nasdaq, saw its shares open down 34 percent the following morning. Tiger Brokers fell 30 percent at the open.
Eight agencies launch a two-year sweep to shut all offshore brokers out of China
The CSRC did not act alone. Eight government bodies, including the Ministry of Industry and Information Technology and the Ministry of Public Security, jointly issued an implementation plan launching a two-year enforcement campaign to eliminate what the regime labels illegal cross-border operations by foreign securities, futures, and fund management firms, China Daily reported.
During the initial crackdown phase, offshore brokers are prohibited from accepting new buy orders or inbound fund transfers from clients inside China. They may only process sell orders and outbound fund transfers, effectively forcing clients into an orderly exit. Once the campaign period ends, all offshore firms must shut down their China-facing websites, trading applications, and supporting servers entirely, and cease providing any services to clients based on the mainland.
SIGN UP FOR OUR FREE NEWSLETTER
You are now signed up for our newsletter
Check your email to complete sign up
The crackdown severs mainland investors’ only practical access to US equities
For years, Futu, Tiger, and Longbridge occupied a legal grey zone. They were fully licensed and regulated in Hong Kong and Singapore, but they actively marketed their services to mainland Chinese residents who, under China’s foreign exchange controls, are technically barred from freely investing overseas.
The Financial Times, citing the CSRC’s May 22 statement, reported that the three firms had for years directed and facilitated cross-border securities transactions for clients inside China without obtaining official approval from mainland regulators.
The crackdown follows Beijing’s first serious investigation of unlicensed offshore brokers, launched in 2023. That earlier sweep put the industry on notice.
Beijing’s own legitimate cross-border investment channels are functionally useless for most retail investors. The Stock Connect programs linking the Shanghai and Shenzhen exchanges with Hong Kong, and the Wealth Management Connect scheme, restrict mainland investors to a narrow set of Hong Kong-listed instruments. The Qualified Domestic Institutional Investor (QDII) mechanism, the only route to genuine global market access, operates under strict quotas set by China’s foreign exchange regulator and has never been expanded to meet retail demand.
Beijing is using capital controls to prevent private wealth from leaving China
The Wall Street Journal, covering the enforcement action, noted that the grey-zone nature of these platforms had always made them vulnerable: the brokers were regulated in Hong Kong and Singapore, but their client base sat on the mainland, where different rules applied. Beijing tolerated the ambiguity for years, then chose to eliminate it.
Since last year, the regime has sharply accelerated oversight of overseas investment activity, tracking in parallel with both the economic slowdown and a broader intensification of political control. Capital is following people in becoming harder to move out of China. The CSRC’s fines total RMB 2.2 billion; mainland retail investors have no remaining legal platform through which to buy foreign equities.