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Beijing expands regulatory crackdown to brokerages that give Chinese investors access to US stocks


  • Beijing’s regulatory crackdown that began last year is now spreading to Chinese brokerage firms.
  • China’s personal data privacy law that takes effect on November 1 could lead to violations and compliance risks for brokerages.
  • Shares of UP Fintech and Futu Holdings fell 24% and 15%, respectively, in Thursday trades.
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The year-long regulatory crackdown from Beijing has now spread to Chinese brokerage firms that give mainland investors access to trade US stocks.

The state-run People’s Daily newspaper said Chinese online brokerages could face violations and compliance risks once a new data privacy law takes effect on November 1, according to Reuters. They give Chinese investors access to securities that trade in other markets like the US and Hong Kong.

This latest regulatory crackdown follows an ongoing trend of Chinese authorities going after different industries, from Jack Ma’s Alibaba and Ant Group, to private tutoring companies and video game firms.

The new data privacy rule will regulate the export of personal information, which would make compliance difficult for online brokerage firms that offer cross-border trading services.

Shares of UP Fintech and Futu Holdings fell as much as 24% and 15%, respectively, in Thursday trades. These Chinese brokerages don’t have licenses in mainland China, but allow Chinese citizens to open up accounts after submitting personal information derived from IDs, tax records, and bank statements.

The People’s Daily asked, “after personal information is collected, where does it go?”

If brokerage firms are unable to comply or adapt to the new privacy data law taking effect next month, they could be forced to cut off mainland Chinese investors’ access to trading US and other foreign stocks.

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