Futu and UP Fintech take down trading apps in China to fully comply with CSRC requirements on access to offshore equities
Futu Holdings and UP Fintech Holding said they will take down their trading apps in China this week, after the country's securities regulator in December ordered both firms to stop giving new onshore traders access to global equities, in breach of the nation's capital controls.
UP Fintech Holding's app Tiger International and Futu Holdings' app Futubull will be removed from app stores in China on Thursday and Friday respectively, according to separate statements on Tuesday. Both firms cited compliance with the Chinese Securities and Regulatory Commission (CSRC) as reasons for the removal.
Shares in Nasdaq-listed Futu Holdings and UP Fintech Holding fell 11 per cent and 6.67 per cent respectively in pre-market trading.
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"In response to the CSRC's rectification requirements on cross-border securities business, Futu will remove the Futubull app from app stores in mainland China to bring its operations into full compliance with regulatory principles," Futu Holdings said in its statement.
It reassured mainland clients that they can still make trades on the app, and that services and operations for existing clients will remain unaffected following removal of the app, which remains available for download and use outside China.
Separately UP Fintech Holding, which operates Tiger Brokers, said it will remove the app to "complete the rectification work with satisfactory results" in response to CSRC requirements.
Existing users can still use the app and receive website links for instructions on how to update the app going forward. UP Fintech stopped accepting applications from new mainland users to open accounts as of December 31, when the CSRC ordered the companies to rectify their operations.
The two online brokers had allowed China-based investors to transact in offshore equities "for the past few years", and were deemed to have operated illegally, the regulator said in December, adding that it first spoke to Futu and Tiger Brokers on November 11, 2021, about their operations.
"The company reiterates that this service adjustment applies to users in mainland China only," UP Fintech said in its statement. "Clients in other countries and regions around the world will not be affected in terms of downloading and using the app."
Futu is backed by internet giant Tencent Holdings while UP Fintech is backed by Xiaomi, currently China's leading smartphone maker.
The CSRC emphasised in February that it would not implement a blanket ban on cross-border trading of Hong Kong and overseas stocks by mainland Chinese investors.
"But when these investors transfer any money to these overseas firms, they will need to strictly comply with the foreign exchange and capital-control requirements of China," the CSRC added.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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