China cracks down on offshore brokerages, restricting mainland investors

China has initiated its most stringent campaign against offshore trading platforms, impacting mainland investors who have increasingly used these services to access overseas markets. The China Securities Regulatory Commission (CSRC) and seven other agencies announced on May 22 that platforms such as Futu, which owns MooMoo, and Singapore-based Tiger Brokers and Longbridge are now restricted for mainland clients.

“

The first thing I worried about was whether the trading restrictions would come immediately.

Under the new regulations, investors can only sell existing holdings and withdraw funds. They are prohibited from purchasing new securities or adding money to their accounts. Regulators aim to "completely eradicate" illegal cross-border securities activities within two years, marking a significant shift in Beijing's approach to capital outflows.

“

So I think this is more about reasserting state control over financial plumbing.

While authorities state the crackdown is intended to protect investors and curb illicit financial activities, analysts interpret it as a move to reassert state control over financial infrastructure. Lizzi C Lee, a fellow at the Asia Society Policy Institute's Center for China Analysis, noted that this reflects Beijing's broader effort to tighten oversight of outbound capital and redirect overseas investing through state-sanctioned channels.

“

For years, Beijing tolerated a degree of ambiguity around cross-border internet brokerages because they helped meet investor demand during a period when China’s official outbound investment channels were very quota-constrained and narrow.

This action signifies Beijing's growing discomfort with a "regulatory grey zone" that had emerged. For years, ambiguity was tolerated as these platforms met investor demand when official outbound investment channels were limited. However, regulators now view these offshore brokerages as operating outside the state's supervisory perimeter, leading to explicit framing of these activities as illegal.

“

But regulators seem to now see these platforms as unlicensed cross-border financial infrastructure operating outside the state’s supervisory perimeter.