China’s securities regulator has moved to penalize multiple cross-border brokerages for conducting business in the mainland without authorization, and the announcement prompted sharp losses in U.S.-listed shares of affected Chinese companies on Friday.
The China Securities Regulatory Commission said it plans to punish Futu Holdings Ltd., UP Fintech Holding Ltd.’s Tiger Brokers and Longbridge Securities Ltd. for offering services, processing trades and otherwise marketing securities products on the mainland without the regulator’s approval. The CSRC said it will confiscate all illegal gains from the domestic and overseas arms of the firms and impose penalties.
The regulator’s statement said the targeted firms carried out a range of activities in mainland China - including marketing services and processing orders - that lacked the required regulatory permissions. The CSRC also noted that the brokerages will be granted an opportunity to present a defense and to participate in a formal hearing before any penalties are finalized.
Market reaction was acute. UP Fintech’s shares fell roughly 27% in early trading on Friday while Futu Holdings’ stock declined by more than 29%. Both firms issued statements saying they are cooperating with the authorities.
The regulatory move reverberated beyond the brokerages into broader Chinese equity markets. Major U.S.-listed Chinese shares recorded notable declines: Alibaba slid 1.8%, Nio dropped 6.5%, Baidu fell 2.5%, PDD Holdings slipped 3.2% and JD.com lost 2.6%. The iShares MSCI China ETF fell 1.4%.
The CSRC action centers on alleged unlicensed activities on the mainland and the stated intention to recover illicit proceeds while imposing additional penalties. The firms named by the regulator retain procedural rights to contest the measures, including formal hearings.
Contextual note: The regulatory announcement and ensuing stock moves reflect immediate market sensitivity to enforcement actions affecting cross-border broker operations and to the potential implications for trading access and distribution of securities-related services in the mainland.