Investors engaged in overseas secondary market trading, along with related institutions and companies, should take note: significant regulatory measures have arrived.
On May 22, the China Securities Regulatory Commission (CSRC) and seven other departments jointly released the "Implementation Plan for Comprehensive Regulation of Illegal Cross-Border Securities, Futures, and Fund Business Activities" (hereafter referred to as the "Plan"). This initiative aims to crack down on the illegal cross-border operations of foreign securities firms. Overseas securities, futures, and fund operators, such as Tiger Brokers (New Zealand) Limited, Futu Securities International (Hong Kong) Limited, and Longbridge Securities (Hong Kong) Limited, are now prohibited from illegally providing services such as buy trades and fund transfers to mainland investors. They are only permitted to facilitate one-way sell trades and fund withdrawals. After a two-year transition period, existing investor accounts will be unable to conduct transactions within mainland China, but they will not be forcibly closed or liquidated.
Three key details of this plan warrant particular attention.
First, this plan represents the second phase of a regulatory campaign launched in late 2022 to crack down on the illegal cross-border operations of overseas brokerages. At that time, regulators prohibited overseas brokerages from illegally soliciting mainland investors, developing new mainland clients, and opening new accounts.
Second, the regulations target overseas brokerages engaged in illegal cross-border operations; investors remain the focus of protection. On one hand, regulators did not immediately halt all transactions but instead established a two-year transition period to allow for a smooth adjustment. On the other hand, after the transition period, investors with legitimate overseas income can still trade through overseas institutions. Furthermore, regulators have opened legal channels for mainland investors to participate in overseas markets, such as the Hong Kong Stock Connect, Qualified Domestic Institutional Investor (QDII) program, and the Cross-boundary Wealth Management Connect, which are all available options.
Third, internet platforms and online self-media are also within the scope of the regulatory crackdown. The specific targets include three categories: 1) Overseas institutions illegally conducting cross-border securities, futures, and fund business; 2) Domestic affiliates or partners assisting overseas institutions in illegal cross-border operations, as well as domestic illegal intermediaries that solicit and guide mainland investors to open securities and futures accounts for profit; 3) Internet platforms, such as websites and apps, that illegally publish marketing information or provide account opening and trading services within China, along with domestic online self-media that illegally publish account opening tutorials, experience sharing, and similar information.
Two-Year Transition Period: Sell-Only, Service Shutdown Afterward For mainland investors holding accounts with overseas brokerages, the most pressing questions are: Can I still use my account? What happens to my assets? The newly released plan provides a clear timeline and operational path.
According to the plan, starting May 22, the regulatory effort enters a two-year concentrated rectification period. The core principle of this phase is "outflow only": overseas institutions are prohibited from illegally providing buy trades or fund transfer services to existing investors within mainland China. Only one-way sell trades and fund withdrawals are permitted.
Simply put, investors can choose to sell assets like stocks and funds held in their accounts and withdraw the funds, but they cannot conduct any new buy trades or transfer additional funds into the accounts.
This institutional design fully reflects the protection of investor rights. The two-year transition period provides investors with a relatively ample time window to orderly dispose of existing positions based on market conditions and personal judgment, avoiding forced liquidation at unfavorable prices. Industry insiders believe this phased, gradual exit arrangement effectively cushions the impact on existing investors and is a pragmatic measure to "minimize the impact on investors while resolutely cracking down on illegal cross-border operations."
After the two-year concentrated rectification period, regulators will take the second step. At that time, overseas institutions must completely shut down their websites, trading software, and supporting services targeting mainland China, and are prohibited from illegally providing any trading services to existing investors within the mainland. This means investors' accounts will become inoperable within China. However, the plan clarifies that existing investor accounts will not be forcibly closed, and funds, stocks, funds, and other assets within the accounts will not be forcibly cleared or liquidated. The safety of investors' assets will not be affected by the regulatory effort.
For mainland investors, regulators explicitly guide them to use legal channels like the Hong Kong Stock Connect, QDII program, and Cross-boundary Wealth Management Connect for overseas investments. These are all compliance channels approved by domestic regulators, where investors' funds and transactions are fully protected by domestic laws. This type of investment is fundamentally different from investing through illegal channels.
It is worth noting that engaging in overseas investments through illegal channels makes it difficult for investors to obtain full protection and recourse under domestic law in case of disputes or losses. Regulators have repeatedly emphasized this risk to remind investors to recognize the nature of illegal cross-border operations, proactively choose legal and compliant investment paths, and protect their own interests from the source.
Three Clear Targets, Internet Platforms in the Crosshairs The targets of this regulatory effort are not limited to overseas brokerages themselves but cover the entire chain of illegal cross-border operations, involving three types of entities. The broad scope and deep penetration demonstrate the regulators' resolute determination.
Specifically, the targets include: First, overseas institutions illegally conducting cross-border securities, futures, and fund business, which are the source and core of illegal activities, such as Tiger Brokers, Futu Securities, and Longbridge Securities.
Second, domestic affiliates or partners assisting overseas institutions in illegal cross-border operations, as well as domestic illegal intermediaries that solicit and guide mainland investors to open securities and futures accounts for profit. These entities are typically responsible for marketing and client solicitation, receiving account opening applications and trading instructions, developing and operating websites and trading software, and providing customer service, acting as key "helpers" in illegal operations.
Third, internet platforms, such as websites and apps, that illegally publish marketing information or provide account opening and trading services within China, along with domestic online self-media that illegally publish account opening tutorials, experience sharing, and similar information.
Notably, in practice, websites, apps, and online self-media have become important tools and hotspots for illegal operations. Unscrupulous actors use these media to publish marketing information related to securities and futures business, post account opening tutorials and experience sharing to attract traffic or earn profits, and even directly provide securities and futures related services. These actions not only violate securities, futures, and fund regulations but also involve misleading advertising and information imbalance, severely harming investors' right to know and their ability to make independent choices.
The CSRC clarified that internet platforms and self-media that publish, disseminate, or transmit information prohibited by laws and regulations will be subject to lawful cleanup and disposal by relevant authorities, targeting online information, accounts, and websites involved in illegal securities activities. This means that borderline content like "account opening guides" and "Hong Kong/US stock experience sharing" active on social platforms, and apps marketing to mainland investors under the guise of "properly licensed" or "overseas licensed," will face strict cleanup and rectification.
Furthermore, the regulatory scope also includes violations of legal provisions by relevant entities in cross-border operations and investment activities. This comprehensive, multi-dimensional framework aims to completely sever the information dissemination chain, client solicitation chain, and technical service chain of illegal cross-border operations, achieving source governance and addressing both symptoms and root causes.
It is important to note that regulators will conduct interviews with the aforementioned targets. On one hand, interviews will be held with overseas institutions engaged in illegal cross-border operations; inspections and investigations will be conducted on institutions involved in illegal cross-border operations; entities suspected of crimes will be subject to criminal investigation; and the disposal of illegal domestic business by domestic entities will be managed.
On the other hand, interviews will be conducted with domestic banks that illegally provide account services for mainland investors' cross-border securities, futures, and fund investments. Domestic banks will be supervised to strengthen compliance reviews of foreign exchange fund outflows, targeting illegal cross-border fund outflow channels such as underground banks.
Addressing Both Symptoms and Root Causes for Long-Term Mechanism, Investor Protection Throughout The introduction of this plan is not an isolated action but a significant step by the CSRC, based on lessons from previous regulatory efforts, to establish a long-term mechanism for preventing and combating illegal cross-border securities, futures, and fund business activities.
From a top-level design perspective, regulators have clarified three strategies: "strengthen source governance, combine prevention with crackdown, and form a collaborative framework," aiming to build a multi-dimensional, all-encompassing defense line against the risks of illegal cross-border operations.
Reviewing the regulatory timeline, the resolute stance has been evident. On December 30, 2022, the CSRC first clarified the illegality of such activities and initiated regulatory efforts against the illegal cross-border operations of overseas brokerages like Tiger Brokers and Futu Securities, banning their incremental illegal business activities and prohibiting them from soliciting mainland investors, developing new mainland clients, and opening new accounts. In June 2025, media reports suggested a resurgence of Tiger Brokers' cross-border account openings for Hong Kong stocks. Securities regulators subsequently required relevant overseas brokerages to rectify issues related to circumventing regulatory requirements and engaging in disguised illegal operations. Under high-pressure enforcement, overseas brokerages like Tiger Brokers, Futu Securities, and Longbridge Securities have ceased illegal account opening services within mainland China, effectively curbing the spread of risks from previous illegal cross-border operations.
Regarding long-term mechanism development, this plan focuses on full-chain governance. On the monitoring and identification front, efforts are strengthened to recognize and warn against illegal cross-border activities. On the information cleanup front, the focus is on rectifying illegal and non-compliant information on internet platforms and self-media. On the investigation and penalty front, key cases will be dealt with strictly according to law. On the cross-border collaboration front, communication and cooperation with international regulators will be enhanced. On the investor protection front, measures include setting a transition period, clarifying asset safety guarantees, and facilitating legal investment channels. Simultaneously, the plan clarifies the responsibilities of relevant departments and local governments, emphasizing inter-ministerial and central-local collaboration to jointly advance the regulatory effort steadily and orderly.
"Resolutely ban the illegal, steadily clean up the existing" — the regulatory approach is clear: resolutely curb the increase of illegal activities while steadily digesting existing risks, combining firm measures with institutional consideration. Integrating investor protection throughout the regulatory process — safeguarding asset safety, providing time for disposal, and offering legal alternative channels — is a concentrated reflection of this approach and provides a reference model for future cross-market, cross-regional regulatory challenges.
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