The China Securities Regulatory Commission has issued corrective measures to Futu Holding and UP Fintech Holding. The two renowned brokers were held liable for unlawful security deals following months of scrutiny.
From the report released by Reuters, the regulatory firm would decide on banning the two brokerage firms from soliciting new business from investors in mainland China.
The news flash came onto the screen after Futu, a holding company in digitalized brokerage and management platform, stopped the plans to list shares on the Hong Kong Stock Exchange. The brokerage explained the move as “a step they are taking to clarify certain matters” with the bourse.
The postponement was done on Thursday, just a day before the expected listing date. The brokerage, however, did not issue a detailed reason for the action.
Up Fintech commonly known as Tiger brokers and Futu Holdings have had a big trading share in China’s economy. The two platforms are registered in Hong Kong, along with other jurisdictions outside China. However, China does not accept the one country, two systems policy.
Both companies operate in a grey area as mainland Chinese regulators do not offer licenses to online brokerages specializing in cross-border trades.
Lately, the report houses revealed the hesitation of China in welcoming foreign brokers. People’s Bank of China senior official claimed that “cross-border online brokerages are driving in China without a driver’s license [and are] conducting illegal financial activities.”
However, Futu has been working towards expanding its base outside China. The brokerage has already penetrated Singapore and is focusing on diversity in western regions.
Tiger brokers stepped on the same path and acquired Hong Kong-based Ocean Joy Securities last year after obtaining regulatory approval in Singapore. Both brokerages are in a chase to run cryptocurrency services outside China.
The tireless efforts of Up Fintech have yielded massive in the last financial year. The company released a total revenue for the third quarter of 2022 amounting to $55.4 million. The figure marked an increase o 3.6% from the previous quarter but a decline o 8.8% year-over-year. In addition, the platform experienced a decrease in the company’s net income which reflected a drop of $17.2 million compared to the income witnessed in the same period in 2021.