Online brokers fall sharply as senior Chinese official calls offshore trading illegal

Shares of Futu Holdings and UP Holdings, two cross-border online brokers, fell drastically on October 28 after a senior Chinese official called their businesses in the Chinese mainland illegal. 

“Online brokerages with only overseas licenses are conducting illegal businesses if they mainly serve investors in China,” SUN Tianqi, the financial stability director of the People’s Bank of China, said at the Bund Summit on October 24. 

Without naming names, Sun said some brokerages registered overseas are open to Chinese clients. 

US-listed Futu and UP Fintech are both such brokerages. Shares of Futu plunged by 30 percent in pre-trading on Thursday and UP dropped by 20 percent. 

Futu said it is registered in Hong Kong and is licensed in many countries, and its operation meets local regulations.