China steps up action against illegal offshore trading by brokers

New Delhi, May 28 (IANS) China has stepped up enforcement against unauthorised overseas stock trading channels as regulators move to tighten oversight of capital outflows amid rising demand from mainland investors for access to global equities, according to multiple reports.

The clampdown comes as financial regulators intensify action against platforms facilitating offshore trading outside approved investment routes, in a broader effort to reinforce capital controls and maintain financial stability.

The China Securities Regulatory Commission (CSRC) penalised Tiger Brokers, Futu Securities International and Long Bridge Securities for illegally offering mainland investors access to overseas stock markets without regulatory approval.

According to the regulator, the firms promoted securities trading and processed orders within mainland China in violation of the country’s Securities Law.

The CSRC said illegal gains would be confiscated and further penalties imposed.

The enforcement push reflects Beijing’s growing concern that rising overseas investment demand, coupled with alternative trading channels, could weaken capital controls and increase risks of unmonitored fund outflows at a time when financial stability remains a policy priority.

Separately, Chinese authorities have pledged to eliminate illegal offshore stockbroking activity within two years, signalling a coordinated and sustained regulatory campaign.

Moreover, Hong Kong’s Securities and Futures Commission (SFC) has also tightened scrutiny of brokerage operations, increasing checks on account openings and documentation to prevent misuse of cross-border investment channels.

According to officials, such unauthorised activities disrupt market order, weaken regulatory visibility over capital flows and raise concerns around investor protection, necessitating stricter enforcement across jurisdictions.

Despite these safeguards, informal and semi-formal channels for overseas investing have continued to emerge, prompting regulators to intensify monitoring and close enforcement gaps.

The crackdown has also weighed on sentiment in offshore brokerage stocks and highlighted the structural tension between investor appetite for global diversification and China’s policy objective of managing capital mobility.

–IANS

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