China says offshore brokerage clean-up won't affect existing clients (updated)

Bright Smart Securities & Commodities

15/02/2023 13:42

(Writes through with more details)
       BEIJING, Feb 15 (Reuters) - 
    China's securities regulator said on Wednesday that a
clean-up of illegal cross-border brokerage businesses does not
affect existing accounts, refuting speculation that offshore
brokerages would be banned from servicing mainland investors.
  
        Official Chinese media reported on Monday that Hong
Kong-based Guotai Junan International had suspended the opening
of accounts by mainland clients, triggering fear of a total ban
on such a business.   
  
        The China Securities Regulatory Commission (CSRC)
admitted that it had recently launched a campaign to clean up
illegal cross-border activities by Chinese brokerages, but said
existing clients would not be affected.
  
        "The core principle is to ban those offshore
institutions without a license in China from soliciting, and
opening new accounts for onshore investors," the CSRC said.
  
        "Meanwhile, existing clients are still allowed to trade
via those offshore institutions, but fresh money inflows into
those accounts must strictly abide by China's foreign currency
management rules."
  
        The CSRC added that some media reports are "not
objective, and not factual."
  
         Mainland Chinese can buy overseas securities via
official channels such as outbound investment scheme QDII, and
cross-border programme the Stock Connect.
  
        However, many Chinese open stock trading accounts in
Hong Kong, potentially bypassing China's strict capital control.
  
        On Dec. 30, the CSRC said online brokerages Futu Holding
 FUTU.O  and UP Fintech Holding  1M5y.F  violated Chinese rules
and banned them from soliciting mainland investors.
 urn:newsml:reuters.com:*:nL4N34T1CV urn:newsml:reuters.com:*:nL1N34T0EE   
  
        The CSRC said on Wednesday that most brokerages with
such businesses are actively making corrective measures, and
have already stopped opening new accounts.
  
        The CSRC added it would strengthen cooperation with
onshore and offshore regulatory bodies to ensure smooth
implementation of the clean-up without disrupting markets.
  
        Hong Kong-based Bright Smart Securities  1428.HK  said
this week it would suspend accounts of mainland Chinese clients
starting Feb. 16, as it awaits clarification from Chinese
regulators.
  
 (Reporting by Ella Cao and Meg Shen; Editing by Toby Chopra)
 ((Ella.Cao@thomsonreuters.com;))