SHANGHAI/Hong Kong (Reuters) -New York-listed shares in Futu Holdings Ltd and UP Fintech Holding Ltd plunged in pre-market trading on Tuesday, after the online brokerages said they will remove their apps in mainland China following guidance from regulators.
The announcement comes amid Beijing’s sharpened focus on data security, and tighter capital controls.
U.S.-listed shares of Futu slumped more than 15% in pre-market trading, while UP Fintech dropped roughly 10%.
The removal of the apps represents the latest efforts by Futu and UP Fintech to satisfy Chinese regulators, who warned as early as 2021 that online brokerages not licensed in China were acting illegally if they served Chinese clients via the Internet.
Last December, the China Securities Regulatory Commission (CSRC) said that Futu and UP Fintech had conducted unlawful securities business and banned them from soliciting new business from mainland investors.
Futu, backed by Chinese internet giant Tencent Holdings, said on Tuesday its apps will be removed from China app stores from May 19, but existing clients are not affected.
UP Fintech, also known as Tiger Brokers, said it will take down its trading platform as of May 18 to comply with the CSRC’s rectification guidance. It added the company remains dedicated to serving existing clients in mainland China.
Both brokerages stressed that app downloads in other markets are not affected.
“The removal is out of expectation but will not materially impact current business operations as the two companies have ceased acquiring users in mainland China since Dec 31, 2022,” said Hanyang Wang, an analyst with 86Research.
It’s not clear if Hong Kong units of Chinese brokerages, such as China International Capital Corp and Haitong Securities, also need to remove their apps in China.
Some Hong Kong units of Chinese brokerages had stopped opening accounts for mainland clients following unwritten guidance from the CSRC aimed at discouraging illegal money outflows, state media reported in February.
Futu, which has delayed its Hong Kong listing plan, holds a licence in Hong Kong, Singapore and the United States. It said in its 2020 annual report that it primarily serves the emerging affluent Chinese population and a large number of its clients were mainland Chinese citizens.
Tiger Brokers said on Tuesday that “moving forward, the company will abide by all applicable rules and regulations in mainland China, and serve its existing clients well.”
(Reporting by Shanghai newsroom; Editing by Sharon Singleton)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.