Hong Kong brokerages have started complying with the country’s strict controls by starting to suspend accounts of mainland Chinese customers. Bright Smart Securities is suspending accounts held by mainland Chinese clients until further regulatory guidance is given. The Hong Kong unit of Chinese brokerage Guotai Junan Securities issued a similar circular. China in December pledged to step up oversight of illegal cross-border securities activities. It told Futu Holdings Ltd. and Up Fintech Holding Ltd. to halt “illegal” activities and stop taking on new onshore investors. Cross-border brokerages have been operating in a grey area by allowing millions of Chinese investors to sidestep capital controls. China bars individuals from using the USD50,000 annual foreign currency quota for purchases of securities and insurance offshore, but many in mainland China have ignored the law and skirted the rules by opening up accounts abroad.
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