The ongoing efforts by China to curb illegal activities related to cross-border brokers have extended to other companies apart from the three mentioned last month (Futu, Tiger, and Longbridge).

According to the First Financial (Yicai) report on June 6, Huasheng Securities notified its customers that effective June 15 in Beijing time, it would suspend all new purchase operations and position openings for its mainland China accounts. It would also suspend all funds and securities inflows into its platform. Customers will still be allowed to trade out any current positions held on their account.

CSRC crackdown pushes more offshore brokers to limit mainland clients

On May 22, the China Securities Regulatory Commission (CSRC) initiated an enforcement action against Futu Securities International, Tiger Brokers and Longbridge Securities as part of its initiative to end cross-border securities business in the country over the next two years.  The regulator fined the three firms with a total of 2.2 billion yuan ($324 million) after they were found guilty of attracting mainland investors without licenses to operate inside the country’s territory, as reported by Cryptopolitan. Futu Holdings alone will have to pay an estimated $271 million fine.

In response, Futu Securities and Tiger Brokers informed their customers that customers situated within China would not be able to open any new position after June 12. Huasheng Securities advised the same would apply to it, although it will begin the restriction after June 15.  It means that the grace period granted by the CSRC ends by May 2028.

What makes Huasheng’s announcement notable is that the CSRC did not single it out. The regulator’s May 22 enforcement targeted only Futu, Tiger, and Longbridge. Huasheng is acting preemptively to comply with what its notice described as “industry regulatory requirements during a two-year intensive rectification period,” Jin10 Data reported.

Although Huasheng is smaller than Futu and Tiger, its decision suggests that compliance measures may extend well beyond the firms specifically identified by regulators. Huasheng operates a Hong Kong-based securities platform serving mainland investors seeking access to overseas equities, making it part of the broader ecosystem targeted by Beijing’s effort to curb unlicensed cross-border securities activity. While Huasheng does not publicly disclose client numbers or assets under management at the same level as its larger listed rivals, its voluntary restrictions indicate that firms throughout the sector are preparing for prolonged regulatory scrutiny.

BlockBeats reported that the restrictions would apply to any trading or fund transfer instructions originating from mainland China, regardless of account type. The brokerage said services for existing investors located outside the mainland would continue, and that client assets would remain safe.

Futu and Tiger shares slide as investors assess regulatory risks

Markets reacted sharply to the initial enforcement announcement. According to reports, shares of Futu Holdings and Tiger Brokers’ parent UP Fintech fell more than 30% in U.S. premarket trading immediately following the May 22 announcement. Subsequent trading saw Futu suffer one of its steepest single-day declines since listing, underscoring investor concerns about the importance of mainland clients to the offshore brokerage business model.

When the CSRC announced its penalties on May 22, Futu shares dropped 26% in a single session. Tiger Brokers fell 23% in sympathy. The KraneShares CSI China Internet ETF and US-listed Chinese stocks including Alibaba also declined, Cryptopolitan reported at the time.

The Financial Times reported that Chinese investors are concerned about missing access to upcoming offerings, including SpaceX’s planned IPO, as the regulatory walls close in.

How China’s brokerage restrictions could reshape overseas investment flows

The crackdown is not just relevant within Chinese borders. Platforms including Futu and Tiger served as major gateways for mainland Chinese investors wishing to gain exposure to offshore stocks traded in places like the United States and Hong Kong. Futu announced that its mainland Chinese client base represents about 13% of its funded client base as of Q1 2026, based on information from Cryptopolitan citing the firm’s filing documents.

The importance of the regulatory effort reaches beyond the client base. The crackdown in Beijing was meant to plug a hole through which mainland Chinese investors gained access to foreign markets outside of approved programs like Stock Connect, Wealth Management Connect, and Qualified Domestic Institutional Investor schemes. Regulatory authorities are clearly indicating that going forward, offshore investing will be conducted via these officially approved channels.

The plan set forth by the CSRC came on May 22 and gives the affected businesses a grace period of two years. Given the time frame of the grace period, the process is scheduled to end in May 2028, when all mainland clients will be able to withdraw their money but not make any more investments.

The regulations eliminate one of the largest buying sectors in global equity markets which had been gaining momentum in recent years. This trend of increasing diligence in onboarding practices can be attributed to regulatory pressure in Hong Kong, Singapore, and London, as reported by Cryptopolitan earlier.

By taking this initiative voluntarily, Huasheng reflects how the enforcement actions of the CSRC are creating a chilling effect on the whole cross-border trading ecosystem, including non-penalized brokerages. The overall impact of these actions taken by mid-size and smaller brokerages would definitely be greater than that of the three aforementioned penalties.

Market operators and investors observing capital flows across Asia must observe if other brokerages follow suit ahead of the deadlines on June 12 and June 15.

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