China’s securities watchdog said mainland investors who already have offshore trading accounts will be allowed to continue transactions while the regulator continues to tighten its oversight over illegal cross-border brokerage services.
(Bloomberg) — China’s securities watchdog said mainland investors who already have offshore trading accounts will be allowed to continue transactions while the regulator continues to tighten its oversight over illegal cross-border brokerage services.
The China Securities Regulatory Commission is now moving to rectify brokerage services offered by offshore units of domestic securities firms that run afoul of the country’s capital controls, according to a statement issued on Wednesday. Still, the regulator said it won’t restrict transactions via existing offshore accounts, provided they comply with the government’s FX regulations.
China’s brokerage shares listed onshore rose early Thursday, with China International Capital Corp. and Everbright Securities Co. gaining more than 2%. Huatai Securities Co. climbed as much as 1.6% to outperform the benchmark CSI 300 Index.
The latest guideline comes as Hong Kong brokerages started to suspend accounts by mainland Chinese customers in the wake of Beijing’s pledge to step up oversight of illegal cross-border activities.
China in December told Futu Holdings Ltd. and Up Fintech Holding Ltd. to halt “illegal” activities and stop taking on new onshore investors, wiping out billions in market value and causing Futu to delay its Hong Kong listing.
China bars its residents from using the $50,000 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 outside its border. In Hong Kong, some brokerages have been operating in a gray area in allowing millions of Chinese investors to sidestep capital controls.
–With assistance from Charlotte Yang.
(Updates with Thursday’s share moves in third paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.