Overview
- The China Securities Regulatory Commission opened investigations and issued advance penalty notices on Friday, May 22, 2026, against Futu Securities International, Tiger Brokers (UP Fintech) and Longbridge for operating in the mainland without required licences.
- Regulators signalled they will confiscate all alleged illegal gains and apply heavy fines, with Futu reported to face a proposed RMB1.85 billion penalty and a personal fine for CEO Li Hua, while firms retain rights to submit defenses and request hearings.
- A State‑Council‑approved rectification plan by nine agencies sets a concentrated two‑year wind‑down that allows mainland clients only to sell holdings and withdraw funds and requires offshore firms to shut domestic‑facing sites and servers after that period.
- U.S.‑listed parents plunged in pre‑market trading on the news, reflecting the business risk from losing mainland retail flows that made up a material share of accounts at the brokerages.
- The move reinforces China's capital‑flow controls, steers investors to approved routes such as Stock Connect and QDII, and could shift demand toward regulated Hong Kong channels or alternative products while regulators say client assets will be protected.