Another cross-border securities firm has taken down the mainland market app.
Recently, Huasheng Securities announced that on March 8th, the company will remove the Huasheng Tong App from its domestic app stores (Apple and Android). For existing customers, Huasheng will not impose any restrictions on their trading activities and app usage. Huasheng will continue to provide a series of normal services such as trading, settlement, and fund withdrawal for existing domestic customers.
According to public information, Huasheng Securities is a licensed securities firm in Hong Kong (central number: AUL711), holding licenses 1, 2, 4, 5, and 9 granted by the Hong Kong Securities Regulatory Commission. It was established in Hong Kong and was jointly invested by Sina and Sina Weibo. In January 2016, it obtained license number 1 from the Hong Kong Securities Regulatory Commission.
On May 16, 2023, Futu Holdings announced that in response to the industry rectification requirements of the China Securities Regulatory Commission to regulate cross-border securities business, Futu plans to remove the Futu Niuniu App from online application stores in China to promote comprehensive compliance with domestic regulatory requirements.
On the same day, Tiger Securities announced that it would adjust the way domestic users update their clients from May 18th and remove its app "Tiger International" from the domestic application market.
Reporters on the interface noticed that the supervision of cross-border Internet brokers has been started since 2021.
At the end of October 2021, Sun Tianqi, Director of the Financial Stability Bureau of the Central Bank, publicly criticized the "unlicensed driving" of cross-border Internet brokers at the Third Bund Financial Summit.
In February 2022, Sun Tianqi also issued a document pointing out that some overseas institutions carry out cross-border financial businesses that are prohibited and not open to the outside world to domestic entities, and some overseas licensed institutions do not obtain relevant domestic licenses, and provide financial services to domestic entities through the Internet. Specific business types include cross-border opening of bank accounts, cross-border securities investment services, cross-border sales of insurance products, cross-border payment services Cross border Bitcoin and ICO trading services, cross-border foreign exchange margin trading.
On December 30, 2022, the China Securities Regulatory Commission (CSRC) released a report on promoting the rectification of illegal cross-border business activities of Futu Holdings and Tiger Securities.
The China Securities Regulatory Commission (CSRC) stated that Futu Holdings and Tiger Securities have conducted cross-border securities business for domestic investors without CSRC approval. According to relevant laws and regulations such as the Securities Law, their actions have constituted illegal securities business operations. The China Securities Regulatory Commission emphasizes that in accordance with the idea of "effectively curbing increment and orderly resolving stock", it plans to require the two securities firms mentioned above to rectify the above-mentioned illegal and irregular behaviors, including prohibiting the recruitment of domestic investors, the development of new domestic customers, and the opening of new accounts.
On January 13, 2023, the China Securities Regulatory Commission officially released the "Measures for the Administration of Securities Brokerage Business" (hereinafter referred to as the "Measures"), which cites relevant provisions of the Securities Law and the Regulations on the Supervision and Administration of Securities Companies to strengthen the daily supervision of illegal cross-border brokerage business. In accordance with the idea of "effectively curbing the increment and orderly resolving the stock", the Measures steadily promote the rectification and standardization work.
On February 15 of the same year, a spokesperson for the China Securities Regulatory Commission pointed out that the standardization and rectification work of illegal cross-border trade was carried out in accordance with the principle of "effectively curbing increment and orderly resolving stock". Its core requirement is to prohibit unlicensed overseas institutions from illegally soliciting domestic investors and not to open new accounts for them; At the same time, existing domestic investors are still allowed to continue trading through their original overseas institutions, but when transferring incremental funds to overseas accounts, existing investors should strictly comply with the relevant regulations of China's foreign exchange management.
Xie Jie, Executive Director of the Securities Crime Research Center at Kaiyuan Law School of Shanghai Jiao Tong University, told Interface News that the core requirements of regulation are mainly reflected in three aspects: first, prohibiting overseas institutions that are not licensed in China from illegally soliciting domestic investors and not opening new accounts for them; Secondly, allow existing domestic investors to continue conducting transactions through their original overseas institutions and resolve them in an orderly manner; Thirdly, when existing investors transfer incremental funds to overseas accounts, they should strictly comply with the relevant regulations of China's foreign exchange management.
"Securities firms should accurately understand and comply with the Securities Law and regulatory regulations, and achieve compliance management and risk control of cross-border business," Xie Jie said.
Senior securities industry expert Wang Jianhui explained to Interface News reporters that the biggest obstacle to cross-border brokerage business is that the foreign exchange management of capital items has not been relaxed, so the development of related businesses still needs to be guided by the current foreign exchange management laws and other relevant regulations. This personal channel for online outward investment may also bring some hidden dangers to the financial system, such as cross-border capital flows, which may have a phased impact on exchange rate stability or fund security.
It is worth noting that based on last year's third quarter report, the performance of Futu and Tiger still maintains a certain growth momentum. Tiger's revenue in the third quarter of last year was 70.15 million US dollars, an increase of 6.2% month on month and 26.6% year-on-year; The non GAAP (Non Standard Accounting Standards) net profit attributable to the parent company during the quarter was $16 million, a month on month increase of 4.3% and a year-on-year increase of 141.1%.
Futu's total revenue in the third quarter of last year increased by 36.2% year-on-year to HKD 2.6504 billion (USD 338.5 million), and its net profit increased by 44.6% year-on-year to HKD 1.0912 billion (USD 139.3 million).