Futu Securities and Tiger Brokers tighten account opening channels in mainland China

Author: Martin

Cross-border online brokerages Futu Securities and Tiger Brokers have recently further tightened account opening restrictions for mainland Chinese residents.

According to the latest regulatory requirements, the two brokerages have significantly raised the account opening threshold, essentially closing off account-opening channels for ordinary mainland Chinese residents.

Futu Securities' account opening requirements have been changed. Mainland Chinese customers are now required to hold proof of overseas permanent residency.

Futu NiuNiu customer service stated that the company is currently upgrading its systems and currently only supports account opening for customers with Hong Kong or Macau ID cards.

Once the system upgrade is complete, customers will be able to open accounts using both a mainland ID card and proof of overseas permanent residency.

Tiger Brokers has also adjusted its account opening policy. In response to the latest regulatory requirements, the company will no longer accept mainland Chinese residents opening accounts by providing documents proving their overseas work or life starting last week.

Currently, it will only accept applications from clients holding non-mainland Chinese IDs.

This means that mainland Chinese residents without overseas permanent residency status are no longer able to open new accounts with these two brokerages.

The door to account opening for mainland Chinese residents at cross-border internet brokerages has been further closed, and the tightening of channels for investing in Hong Kong and US stocks has become a focus of recent market attention.

Gradually tightened account opening conditions

This adjustment is not a sudden move. Futu Securities' previous account opening policy was:Mainland Chinese customers can only open accounts if they actually work or live abroad, and they must provide a valid mainland ID card and relevant proof of overseas work or living.

Tiger Brokers' previous policy was:Mainland Chinese customers living abroad are required to provide valid proof of overseas work or living, such as local work visas, residence permits, tax receipts, etc.

From the rectification process, Futu Securities and Tiger Brokers have gradually tightened the account opening conditions for mainland Chinese residents.The core requirements have been tightened from proof of existing account opening at other overseas securities firms to proof of overseas work or life, and then to the recent complete closure.

Regulatory Background and Rectification Process

Since 2022, the two brokerage firms have begun to close account opening channels for mainland Chinese residents at the request of regulatory authorities. In December 2022, the China Securities Regulatory Commission (CSRC) issued an announcement announcing the advancement of the rectification work on the illegal cross-border business of Futu Holdings and Tiger Securities, and proposed the rectification strategy of

"effectively curbing the increase and orderly resolving the existing problem."

The CSRC pointed out at the time that Futu Holdings and Tiger Securities conducted cross-border securities business for domestic investors without the approval of the CSRC. According to the Securities Law and other relevant laws and regulations, their actions constituted illegal operation of securities business.

On October 15, 2021, the CSRC expressed its regulatory attitude through the media; on November 11 of the same year, the CSRC held a regulatory interview with senior executives of Futu Holdings and Tiger Securities.

Similar actions by other securities firms

Not only Futu and Tiger Securities, other cross-border securities firms have also taken similar actions.

Since August, Interactive Brokers, the world's largest Internet securities firm, has also gradually tightened the account opening channels for mainland Chinese residents, and the company's APP has been removed from various domestic application stores.

Another overseas brokerage, Changbridge Securities, also announced in June that it would completely halt account opening for users in mainland China through the proof of deposit method, and its app could no longer be searched or downloaded.

These adjustments indicate that regulators are comprehensively and deeply rectifying the business operations of cross-border internet brokerages targeting mainland residents.

Formal Channels for Investing in Hong Kong and the United States

For mainland investors, formal channels for investing in Hong Kong stocks still exist. Currently, mainland investors can invest in Hong Kong stocks through the Hong Kong-Shenzhen Stock Connect and mainland-listed Hong Kong stock ETFs. The core requirement for applying for Hong Kong Stock Connect is that the average daily assets in the securities and capital accounts must be no less than RMB 500,000 in the 20 trading days prior to applying for access. Investing in Hong Kong-listed ETFs through mainland China has no capital threshold, making it more friendly to small and medium-sized retail investors. According to Wind data, the share size of Hong Kong-listed ETF products has grown significantly recently, reflecting investors' strong interest in the Hong Kong stock market. Regarding whether the account opening threshold for mainland residents will be restored to the original requirement in the future, Futu Securities customer service staff stated that they have not received any relevant notification at this time.

As my country's tax authorities increase their enforcement of taxation on personal overseas income, many mainland residents investing in Hong Kong and US stocks have received numerous tax refund notices from local tax authorities since the second quarter of this year.