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Futu, Tiger Brokers fall sharply as Chinese central banker warns on offshore trading by online brokers
- People’s Bank of China official said online brokers need to be licensed in China to offer cross-border trades to mainland residents
- China’s strict data privacy law goes into effect on November 1, raising risks for online brokers, state media said recently
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US-listed brokers Futu Holdings and Tiger Brokers fell sharply in early trading in New York on Thursday after a top Chinese central bank official warned online brokers who offer cross-border trades to mainland investors without a domestic licence are operating illegally.
Sun Tianqi, head of the Financial Stability Department at the People’s Bank of China (PBOC), said at a financial forum over the weekend that brokers, even if they are licensed elsewhere, were running afoul of the law if they offer such trading in US and Hong Kong markets without a relevant licence in China.
“Cross-border internet brokerages are driving without a licence in China and are conducting illegal financial activities,” Sun said in the speech, according to a transcript released on Wednesday.
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On Thursday, Tencent Holdings-backed Futu’s shares fell as much as 25 per cent in early trading, while Xiaomi-backed Up Fintech Holding, which is known as Tiger Brokers in Asia, declined as much as 20 per cent.
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China passed a sweeping data privacy law this year, which imposes some of the strictest limits on how personal data can be collected, used and managed. The law comes into effect on November 1.
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The People’s Daily, a Chinese Communist Party mouthpiece, said this month that Futu and Tiger faced regulatory risks in meeting the requirement to protect user data.
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