China’s ongoing efforts to curb illegal activities related to cross-border brokers have extended to companies other than the three mentioned last month (Futu, Tiger, and Longbridge).
According to First financial report (Yicai) on June 6Huasheng Securities has notified its clients that effective June 15 Beijing time, it will suspend all new purchases and opening positions for its accounts in mainland China. It will also suspend all flows of funds and securities to its platform. Clients will still be permitted to trade any existing positions in their accounts.
CSRC campaign pushes for more offshore brokers to limit mainland clients
On May 22, the China Securities Regulatory Commission (CSRC) initiated an enforcement action against Futu Securities International, Tiger Brokers and Longbridge Securities as part of its initiative to wind down cross-border securities businesses in the country over the next two years. The regulatory authority imposed fines on the three companies totaling 2.2 billion yuan ($324 million) after convicting them of attracting mainland investors without licenses to operate within the country’s territory. As reported by Cryptopolitan. Futu Holdings alone will have to pay a fine estimated at $271 million.
In response, Foto Securities and Tiger Brokers Huasheng Securities has informed its clients that clients located within China will not be able to open any new position after June 12. Huasheng Securities advised that the same will apply to them, although the restriction will begin after June 15. This means that the grace period granted by the Securities Regulatory Commission ends by May 2028.
What makes Huasheng’s announcement notable is that the SEC did not specifically mention it. The regulator’s May 22 application targeted only Futu, Tiger and Longbridge. Huasheng is working proactively to comply with what its notice described as “industry regulatory requirements during an intensive two-year correction period.” Data for Jin10 are reported.
Although Huasheng is smaller than Foto and Tiger, its decision indicates that compliance measures may extend beyond companies specifically identified by regulators. Huasheng operates a Hong Kong-based securities platform serving mainland investors seeking access to offshore stocks, making it part of the broader ecosystem targeted by Beijing’s efforts to curb unlicensed cross-border securities activity. While Huasheng does not publicly disclose client numbers or assets under management at the same level as its larger listed rivals, its voluntary restrictions suggest that companies across the sector are bracing for lengthy regulatory scrutiny.
BlockBeats has been reported The restrictions will apply to any trading or money transfer instructions issued from mainland China, regardless of account type. The brokerage said that services provided to existing investors based outside the mainland will continue, and that client assets will remain safe.
Futu and Tiger shares fall as investors weigh regulatory risks
Markets reacted sharply to the initial implementation announcement. According to reports, shares of Futu Holdings and Tiger Brokers’ parent UP Fintech fell more than 30% in US pre-market trading immediately after the May 22 announcement. Subsequent trading saw FOTO suffer one of its biggest single-day declines since its listing, underscoring investor concerns about the importance of mainland clients to the offshore brokerage’s business model.
When the SEC announced its sanctions on May 22, FUTO shares fell 26% in one session. Sympathy for Tiger Brokers decreased by 23%. The KraneShares CSI China Internet ETF and US-listed Chinese stocks, including Alibaba, also fell, Cryptopolitan reported at the time.
Chinese investors are concerned about losing access to upcoming offerings, including SpaceX’s planned IPO, as regulatory walls close, the Financial Times reported.
How could China’s restrictions on intermediation reshape investment flows abroad?
The importance of the crackdown is not limited to the Chinese border. Platforms, including Futu and Tiger, have served as major gateways for mainland Chinese investors wanting exposure to offshore stocks traded in places like the US and Hong Kong. Futu announced that its mainland Chinese customer base represents approximately 13% of its funded customer base as of Q1 2026, based on information from Cryptopolitan Citing company filing documents.
The importance of organizational effort goes beyond the customer base. Beijing’s crackdown was intended to close the loophole through which mainland Chinese investors were able to access foreign markets outside approved programs such as Stock Connect, Wealth Management Connect, and qualified domestic institutional investor schemes. The regulatory authorities clearly indicate that in the future, external investment will be made through these officially approved channels.
The plan, drawn up by the Securities and Exchange Regulatory Commission on May 22, gives affected companies a two-year grace period. Given the time frame of the grace period, the process is scheduled to end in May 2028, when all mainland clients will be able to withdraw their funds but will not make any further investments.
These regulations eliminate one of the largest buying sectors in global stock markets, which has been gaining momentum in recent years. This trend of increasing care in preparation practices can be attributed to regulatory pressures in Hong Kong, Singapore and London. As reported by Cryptopolitan previously.
By voluntarily taking this initiative, Huasheng reflects how CSRC enforcement actions are creating a chilling effect on the entire cross-border trading ecosystem, including unsanctioned brokerage firms. The overall impact of these measures taken by medium and small-sized brokerage firms will certainly be greater than the three penalties mentioned above.
Market operators and investors monitoring capital flows across Asia should note whether other brokerages follow suit ahead of the June 12 and 15 deadlines.
