By LIU Chenguang
Futu Holdings said on Tuesday that it will remove its “Futu Niuniu” app from Chinese app stores on May 19. This move comes as a response to a CSRC rectification request. The app will still be available for trading to existing mainland clients, while Hong Kong and overseas users can continue to download and use the app without any impact.
In a similar vein, Tiger Brokers will also adjust its approach to cater to the CSRC’s requirements. The company will remove its trading app from Chinese app stores on May 18. It will not disrupt the app’s usage for existing clients.
Following the announcements, both Futu Holdings and Tiger Brokers, two prominent technology brokerage firms, saw a significant decline in their pre-market stock prices. Futu Holdings’ shares plummeted over 15 percent, while Tiger Brokers was down more than 10 percent.
Regulation of cross-border online securities brokers has been ongoing for several years in China. In October 2021, the director of the Financial Stability Bureau of the People’s Bank of China criticized “unlicensed driving” by these brokers.
In February last year, it was highlighted that certain overseas institutions were engaging in prohibited financial activities with domestic entities, and some licensed overseas institutions were providing financial services to domestic entities without the required licenses.
The CSRC subsequently cracked down on illegal cross-border business by Futu and Tiger, stating that their actions constituted the illegal operation of a securities business.
The removal of the apps will have a significant impact on both companies. The user base is unlikely to grow, and existing clients may have to find alternative ways to continue using the services.
Futu and Tiger had substantially registered user bases and fast-growing memberships.
