On June 6th, following in the footsteps of Futu, Tiger, and Changqiao, Huasheng Securities announced that it will suspend the buy-in and transfer services for existing mainland Chinese clients starting from June 15th. This move marks another cross-border brokerage firm following suit in cleaning up their mainland operations as part of a comprehensive regulatory action initiated by the China Securities Regulatory Commission (CSRC) in conjunction with eight other departments.
Huasheng Securities issued a notice to clients on the morning of June 6th, stating that starting from June 15th Beijing time, adjustments will be made to services for existing investors’ accounts in mainland China. These adjustments include the suspension of new opening and additional trading of all types of securities in mainland China, with only selling and closing operations being supported. Additionally, fund transfers and security transfers into mainland China will be suspended, while the outbound transfer function will remain normal.
The announcement mentioned that these adjustments are in line with the industry regulatory requirements of a 2-year concentrated rectification period, aimed at promoting the standardized development of cross-border securities business. It emphasized that these adjustments will not affect the services provided to existing investors overseas, nor will it impact the safety of clients’ current assets. Clients will still be able to check their accounts, holdings, and sell existing positions as usual.
According to a report by “First Financial,” this also indicates that apart from the three brokerage firms directly named by the CSRC on May 22nd, some small and medium-sized brokers will also begin rectifying their illegal mainland operations.
Official information reveals that Huasheng Securities, founded in Hong Kong, has investment from Sina and Weibo. It holds licenses numbered 1, 2, 4, 5, and 9 granted by the Hong Kong Securities and Futures Commission. Its independently developed trading platform, Huasheng Tong, offers investors online services for trading in Hong Kong stocks, US stocks, and A shares.
Before Huasheng Securities announced their adjustments, the market was rattled by a hefty regulatory fine in this rectification action.
The CSRC recently announced investigations and administrative penalties in advance against relevant entities within mainland and overseas entities related to illegal securities operations by Tiger Brokers (NZ) Limited (Tiger), Futu Securities International (Hong Kong) Limited (Futu), and Changqiao Securities (Hong Kong) Limited (Changqiao).
Late on May 22nd, Futu Holdings and Tiger Securities disclosed their penalties. Futu Holdings was fined approximately RMB 1.85 billion (about USD 271 million), while Tiger Securities faced total administrative penalties of around RMB 308.1 million, with illegal gains totaling approximately RMB 103.1 million being confiscated.
As per the “Comprehensive Rectification Plan for Illegal Cross-border Securities, Futures, and Fund Operations” jointly published by the CSRC and eight other departments, a 2-year concentrated rectification period was designated for illegal mainland operations. During this period, foreign institutions are prohibited from illegally providing services such as buying trades and fund transfers to existing investors within mainland China, allowing only one-way selling trades and fund transfers. After the concentrated rectification period expires, foreign institutions must completely shut down their mainland websites, trading software, and related services, prohibiting the unlawful provision of trading services to existing investors within mainland China.
Several analysts have pointed out that this is no ordinary financial regulatory action.
In a self-media program, commentator Tang Jingyuan mentioned that this operation is a joint effort by eight departments, signifying a national-level collaborative action rather than standard regulation. He highlighted that the sudden heavy penalties on cross-border brokerages by the Chinese authorities are not just about supervision but rather a systematic financial harvesting operation. Its core objective is to cut off the channels for Chinese people to invest in overseas markets and prevent continuous outflow of funds.
Seasoned media personality Shi Shan, in the program “Good Morning China,” stated, “This is a case of ‘closing the door to catch the dog.’ First, they close the door, prevent money from leaving, and then force you to return to A-shares.” He added, “The central government’s fiscal deficit has hit a record high, with local finances relying heavily on central subsidies. As money continues to flow out, the Chinese government is naturally anxious.”
Tang Jingyuan further warned that the crucial signal in this action is that the authorities are beginning to crack down comprehensively on Chinese residents’ overseas investments. He pointed out that the penalties announced so far are just the appetizers, with the real investigation only beginning, hinting at even more significant punitive measures to come.
Meanwhile, the Hong Kong Securities and Futures Commission issued a circular to the industry, requiring licensed corporations to implement mandatory additional reviews for mainland clients. Shi Shan noted that this is Hong Kong’s compliance with Beijing’s actions, indicating the continued erosion of Hong Kong’s remaining status as an “international financial center.”