“We are not like [Robinhood] because they sell order flows in exchange for letting customers trade for free,” Li said in an interview with South China Morning Post in Shenzhen. “That’s not a business [model] that we are getting involved in, at least for now.”

“Online stock trading in China topped the world in 2018 with 31 per cent of the market, showing the steadily rising demand of investors using online channels for their transactions,” according to First Shanghai Securities’ analyst Li Jinglin, in a January 22 report. “Compared with traditional brokerages with bricks-and-mortar shops, online brokers that focus on online trading have improved efficiency, relatively lower commission rates and fees after they cut their overheads, and they are better able to win over loyal customers with their cost advantage.”

Comprising mostly millennials who came of age in 2000 or even some Gen Z traders born in the 21st century, these young customers prefer simple, do-it-yourself systems that let them trade from the convenience of their ubiquitous smartphones. Lower transaction fees were also a big plus, encouraging more traders to get in and out of positions more frequently, even with smaller wins.

Futu’s commission is 0.05 per cent, with the minimum amount set at HK$50 (US$6.4) except for new users in certain periods, compared with 0.03 per cent in commission fees plus 0.03 per cent platform fees by Tiger Brokers, and 0.25 per cent by Huatai International with a minimum amount of HK$100.

Such was the market situation that drew Li, who turns 44 this year, to abandon a promising career in what would become China’s most valuable company to strike out on his own.

Li, who studied computer science, joined Tencent in 2000, two years after graduating from Hunan University in central China. His English name Leaf is a homophone of his Chinese name in his native Changsha dialect.

Joining the then start-up, Li worked alongside Tencent’s founder Pony Ma Huateng, helping to develop the QQ messaging service that helped to connect people from far-flung regions around China. QQ, still in use today by 600 million active users every month, would turn out to be one of Tencent’s most successful products. After two years of working on QQ, Li was promoted to head a division at Tencent charged with creating video content.

Tencent went public in 2004, raising HK$1.79 billion in an initial public offering on the Hong Kong stock exchange. The company’s shares have jumped almost 200 times since going public, valuing Tencent at HK$7.08 trillion as the sixth-largest publicly traded company on earth.

As a middle-ranking manager and one of the earliest employees – he was staff No. 18 – Li was rewarded with share options that turned into instant wealth. Tencent’s listing in Hong Kong also gave Li an early peek at how the stock market worked, giving him first-hand experience of investing across different currencies and markets, as well as having to navigate different regulatory requirements.

He left Tencent in 2008 to focus on his venture, picking the date – four days after Valentine’s Day – of his eighth anniversary as his last day at the company, according to his blog. He had not even told his parents about his resignation, causing them to wonder if he had been fired for misconduct, he wrote.

The early days were hard, as he struggled to raise capital and to navigate the underdeveloped market for online stockbroking.

“If I was given another chance, I may not choose to start my own business,” Li said. “That’s not to say I regret becoming an entrepreneur, but many things were far more difficult than I originally thought.”

Three years would go by, before his product was ready to launch. For Futu to progress from vision to reality, Li said he had Tencent to thank, both for eight years of working in one of China’s largest technology companies, and for its financial backing.

“Most people lack the ability to believe, especially the ability to believe in the future … Many people believe it after they see it happen,” he said, adding that his experience at Tencent made it “very easy” for him to believe the future.

Tencent also became one of the earliest investors in Li’s start-up. China’s largest publicly traded company is now Futu’s second-largest shareholder, owning 18.9 per cent of its class A shares an 25.9 per cent of Class B shares.

Online brokers have disrupted the traditional brokerage segment over the years, benefiting from a surge in direct financing. China recorded double-digit growth in the number of securities apps users between December 2016 and July 2020, according to iMedia Research.

A lower growth of new users, lower-than-expected market activities and possibly tighter regulation could pose risks for Futu, the analyst said.

“Online brokers have the advantage in costs, so traditional brokers will lose their competence if they don’t diversify their businesses,” Futu’s founder said. “Their brand franchise, experience and the accumulation of human relations should be what they must focus on.”

Futu now employs more than 1,300 around the world. Its stock has risen 15-fold since its 2019 initial public offering in New York, valuing the company at US$24.5 billion, about a fifth the capitalisation of Charles Schwab, founded half a century ago in 1971. Subscriptions of the company’s Futu Money Plus fund reached more than HK$10 billion at the end of 2020.

Futu’s growth has turned Li into China’s 66th-weathiest billionaire, according to Bloomberg, estimating his fortunes at US$9.3 billion through a 40-per cent stake in Futu, making him the stockbroking industry’s 11th-richest broker.

Recriminations continue in the United States over the GameStop mania, with Robinhood’s 34-year-old chief executive Vlad Tenev being called to testify to the US Congress this week about the temporary trading restriction placed on the stock. Thankfully for Li, Futu is spared the scrutiny.

“Futu is actively communicating with upstream channels to enhance trading channel capacity,” Li said two weeks ago when the Chinese broker had to follow its US dealers in restricting transactions, adding that the company will continue to vet new customers before opening accounts and increase risk alerts to users. “We are also planning a new round of capacity expansion in the Hong Kong market to ensure customers’ orders are processed quickly and smoothly.”

(Corrects the story to say that the Futu Money Plus is a fund for public subscriptions)