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The "Fearless Girl" statue facing the New York Stock Exchange (NYSE) in New York City on February 15, 2019. Photo: AFP

Xiaomi-backed online broker that serves Chinese stock traders aims to raise US$150 million in Nasdaq IPO

  • Xiaomi, one of the world’s largest smartphone makers founded by Chinese entrepreneur Lei Jun, owns 14.1 per cent of up Fintech Holding
  • Interactive Brokers Group, one of the world’s biggest online brokers, has a 9.5 per cent stake

An online broker serving Chinese investors, Up Fintech Holding, is aiming for to raise US$150 million in an initial public offering on the Nasdaq Global Select Market, according to a preliminary prospectus filed with the US Securities and Exchange Commission last night.

The company, which operates an online and mobile platform under the name Tiger Trade App, offers brokerage and other trading services. It counts China’s Xiaomi, one of the world’s largest smartphone makers, as a major investor and strategic partner.

Xiaomi has a 14.1 per cent stake in Up Fintech while Interactive Brokers Group, one of the largest electronic brokers in the United States, has a 9.5 per cent stake. The biggest shareholder is its founder, a former Chinese internet firm employee Wu Tianhua.

Up Fintech, founded by Wu, who used to work at NetEase, has yet to generate any profit. The Beijing-based firm said its revenue nearly doubled last year to US$33.6 million, but net loss widened to US$44.3 million from 2016’s US$10.8 million, according to a preliminary prospectus filed with the SEC.

Wu Tianhua, founder and chief executive officer of Tiger Brokers. Photo: SCMP

The company said it is the largest online broker focusing on global Chinese investors in US securities trading volume, with a market share of approximately 58.4 per cent in 2017, citing information by iResearch.

According to the prospectus, Up Fintech’s total trading volume reached US$119.2 billion in 2018 from US$16.3 billion in 2016 and US$63.3 billion in 2017.

The company currently offers US and Hong Kong securities on its platform and said most of its customers are mainland Chinese citizens living in the country. It cited regulatory risk with Chinese authorities as a major risk in its business outlook.

The Chinese securities regulator China Securities Regulatory Commission (CSRC) has not approved any domestic or foreign institutions to provide services for domestic investors to trade overseas, except through limited cross-border channels known as Connect schemes with the Hong Kong exchange.

Chinese residents are only able to convert up to US$50,000 equivalent of yuan each year for personal use under the rules of the State Administration of Foreign Exchange (SAFE), the exchange regulator.

Up Fintech said it planned to use the net proceeds from its US listing to invest in product development, sales and marketing activities, technology infrastructure, and capital expenditures and it also has plans to apply for licenses in other countries to expand its business.