Cross-Border Regulation on Uncle Xiang's Notebook

Illegal Cross-border Exhibition Rectification (Part III): Re-evaluating Online Securities Broker Valuation

Fri, 22 May 2026 20:32:00 +0800

For a platform, what is most damaging from regulatory crackdowns on illegal cross-border activities is not the stock price for one or two days, but the potential reassessment of its entire historical growth model. Fines are one account; whether the retained domestic customer base can continue to contribute transactions, financing, assets, and conversions is another, much longer-term concern.

The greatest strength of internet brokers like Futu and Tiger is their ability to make Hong Kong and US stock trading a low-friction product. The problem is that when this experience faces mainland users, it encounters barriers related to licensing, foreign exchange regulations, suitability assessment for investors, data handling, and the boundaries of cross-border financial services.

Therefore, the third section should focus only on the business model and institutional stratification. Although the product capability of cross-border securities firms remains strong, if regulatory boundaries re-enclose the largest and most readily available user base, its valuation can no longer be predicated on old growth stories.

Internet Brokers are the Most Complete Sample

From a regulatory perspective, Futu, Tiger, and Changqiao share one common characteristic: they possess complete online pipelines, standardized business models, and highly digitized customer acquisition and trading processes. The advantage of this model is rapid growth; however, its drawback is that it leaves an equally comprehensive compliance footprint.

If we break down an illegal cross-border exhibition link, it is roughly:

Content and advertising reach to domestic users
Guiding app download or access to the account opening page
Completing account registration remotely
Handling transactions through offshore accounts
Establishing complementary channels for fund inflows and outflows
Continuous maintenance of stickiness through customer service, community, and investment education content

Online brokerage firms have almost standardized all six steps into core products. From a regulatory perspective, such subjects are the easiest to categorize, the most straightforward to document evidence against, and thus also the most effective in establishing an industry precedent (or deterrent effect).

Therefore, naming online brokerage firms initially should not be interpreted as meaning that only they are problematic; the more reasonable understanding is that they represent a sample chain that regulators can fully dissect/analyze.

Not Mentioned Does Not Mean Being in the Safe Zone

Regarding this point, the China Securities Regulatory Commission’s (CSRC) Q&A with journalists on February 15, 2023, stated it very clearly: In accordance with the principle of implementing unified supervision for similar types of businesses, the CSRC at that time had “deployed and initiated standardized rectification work for illegal cross-border expansion by offshore subsidiaries of mainland securities companies.”

This statement is crucial. It indicates at least three things.

First, the regulatory logic has never been one where “internet brokers operate under one set of standards, and Chinese domestic brokers operate under another.” Second, what started at the end of 2022 was not merely an isolated case involving Futu or Tiger, but rather a larger unified rectification framework. Third, different levels of public exposure do not equate to different regulatory requirements.

Therefore, I disagree with the view that “only these three companies are going to suffer; the others can get away with it.” But I also don’t agree with the statement “everyone is compromised,” which outright dismisses everything. This judgment is too crude and fails to help differentiate true risk exposure.

A more accurate way to put it is: Different institutions have different ways of being exposed to risks, and the pressure for rectification will also be layered.

More useful than hitting with a single stick by looking at layers

Considering only public definitions and business models, they can generally be divided into three levels/layers.

Segmentation	Typical Characteristics	Pressure Intensity
High-Risk Exposure	Clearly targeting Mainland retail investors for online solicitation, account opening, trading, community operation, and content deployment	Highest
Medium-Risk Exposure	Mainly serving existing clients; public client acquisition efforts are weaker, but historical business chains remain	Second Highest
Low-Risk or Compliant Channels	Serving through licensed, certified, and quota-restricted channels such as Stock Connect (HK), QDII, Cross-border Wealth Management Channels, etc.	Relatively Controllable

The third layer here is the easiest to confuse. Many people conflate the legitimate channels for investing in Hong Kong and US stocks with overseas institutions that do not hold domestic licenses but directly offer services to Mainland residents. In reality, this boundary is precisely what this current round of rectification aims to demarcate.

The legal cross-border investment channels themselves have not been fundamentally negated. What has been addressed/rectified are the segments of the process that circumvent domestic licensing, bypass market entry approvals, and skirt both capital and operational boundaries.

Next, pay closer attention to the implementation details

If we continue to follow the current trend established by open policies, I am more inclined to see several types of actions emerging successively.

The first type involves brokerage firms implementing self-imposed regional isolation. For example, the account opening page, account opening link, distribution channels, customer service talking points/scripts, community content, and identification of the source of the account opening link will more strictly differentiate between domestic (mainland) and non-domestic users.

Category two involves segmenting trading permissions for existing accounts. The most common approaches include setting up sell-only functionality, or handling permissions separately based on different markets, products, and currencies.

Category Three: Funding channels are continuously tightening. Even if the securities firm’s front-end announcement hasn’t been fully released, banks, payment services, currency exchange, and deposit/withdrawal pipelines may tighten first. Often, what truly hinders user experience is not the trading button itself, but the difficulty in getting funds deposited.

Category Four: The asset transfer arrangements are gradually becoming clearer. This area currently has the least public information available, but it is the most worth monitoring. This is because it determines whether clients can only liquidate their assets, or if they have the opportunity to transfer and absorb them through compliant structures.

Regarding Category V, the penalty document will clarify and standardize the guidelines. Specifically, how exactly “all illegal gains” are calculated, what period they track back to, and which entities are covered. The currently published guidelines for this portion are incomplete; only the release of a formal penalty document later on will serve as the true valuation anchor point.

It won’t stop at just three names

My personal judgment is that this will not stop at simply “publicly naming three companies.”

The reason is simple. The joint plan of eight departments aims to regulate a type of activity, not the brand names of three companies. As long as the business model remains within the same value chain, it is unlikely that it can operate outside the framework for a long time, even if subsequent penalties, levels of public disclosure, or intensity of rectification vary.

The three things that make a difference might be:

What is the magnitude of the historical stock size?
To what extent have internationalization and reducing dependency on mainland been achieved over the past two years?
Did institutions preemptively implement regional isolation and inventory pressure reduction?

Therefore, when looking at this matter going forward, it’s not simply about guessing “who else will be named,” but rather whose business structure is better equipped to withstand this round of boundary redrawing.

Convergence of Series

If you read the three articles together, the connection is actually very clear:

In 2022, the focus was on restricting new additions. The CSI Stock Connect event provided a clear transition period of nearly one year. This time on May 22, 2026, the scope has upgraded to existing holdings only selling and not buying, and it has begun publicly treating internet brokerage firms as typical samples.

If I have to make the shortest assessment, I would say:

This is not a sudden reversal, but rather a regulatory trend that started several years ago and has reached the stage where existing businesses must also be included in the disposal/resolution scope.

Of course, there will also be implementation rules, company responses, formal penalty documents, and asset handover arrangements later on. However, in terms of the general direction, this grey cross-border retail channel will continue to be compressed, leaving virtually no doubt. What truly remains to be waited for is the speed, scope, and cost at which it will be compressed.

References

[CSRC Promotes Remedial Work on Illegal Cross-Border

Author’s Notes

Original Prompt

Breaking news in Hong Kong and US stock trading today: Institutions like Tiger Securities were severely disciplined for illegal cross-border operations, and Futu and Tiger dropped 40% pre-market. Let's first review the previous CSRC investigation action, which completely locked down account opening for mainland users, but existing clients were unaffected. This time, it is the existing clients who face trading bans. Last year or the year before, there was a ban on HK stockbrokers serving mainland clients regarding transactions through Shanghai Stock Connect (read: "Search related policies to confirm how long the gap is between policy implementation and brokerage enforcement in banning mainland users from buying"). Today's news said there was a two-year period for users to clear their positions, but it didn't specify when the buy ban would take effect. It also did not clarify for how long illegal profits would be retroactively charged. Even if Futu published an announcement, as of the end of Q1 2026, the proportion of mainland Chinese clients with assets to the total group assets has dropped to 13%. Meanwhile, under the group

This rewrite retains the original manuscript's regulatory pathway, institutional stratification, and follow-up observation points. However, it has narrowed the scope of the third section's commitment to focusing on "how the platform growth model is re-evaluated." It avoids expanding further on account operation details to prevent repetition with the second section.

Illegal Cross-Border Exhibition Rectification (II): The Two-Year Window Most Easily Misinterpreted

Fri, 22 May 2026 20:31:00 +0800

After regulatory news breaks, what ordinary users are most concerned about is not the brokerage firm’s stock price, but whether they can still operate their own accounts: whether they can buy, sell, withdraw funds, or transfer positions. The phrase that is easiest to misunderstand here is “the two-year focused cleanup period.”

If only new account openings are restricted, the perceived experience of existing users will not change immediately. However, if current transactions are further restricted, users will encounter entirely different issues. The mildest approach might be a sell-only mandate; the most restrictive could require fund transfers, capital withdrawals, or the revocation of certain trading permissions.

This piece only discusses the user side. What truly needs preparation is not speculating whether regulations will loosen, but rather separating and analyzing “the length of historical buffers granted” from “what these public statements currently require.”

That time with the Shanghai Stock Connect program really took almost a year

Many people only recall “that later they couldn’t buy it,” but don’t remember how long the gap was. According to the public rules and exchange operational notices, it was roughly like this:

Date	Document/Action	Key Details
2022-06-24	HKEX Participant Announcement CT08822E	Established transitional arrangements for qualified existing investors due to mainland rule revisions.
2022-07-25	SFC Notice No. 200 Takes Effect	Clarified that Hong Kong securities firms’ mainland investors cannot buy or sell A-shares through the Stock Connect, but existing investors can continue to trade during the transition period.
2023-07-23	Last Day of Transition Period	The last day that existing investors could normally purchase shares.
2023-07-24	Formal Switch	Mainland investors can only sell and cannot actively buy; Futu Help Center also executes instructions based on this date.

If calculated based on the period from rule effectiveness to the front-end ban, the interval was from 2022-07-25 to 2023-07-24, which is approximately 364 days. Based on the period from the exchange announcement public disclosure to the front-end ban, that spans from 2022-06-24 to 2023-07-24, totaling 39

So, it wasn’t that there was no buffer at all; rather, they provided a buffer of nearly a year, and also clearly stated the final blackout date.

But we cannot directly apply a full year’s buffer this time

On the surface, this two-year intensive remediation period appears to be longer than the previous one. In reality, the scope of supervision and the ultimate goals for handling the two matters are not the same.

During the SSE Stock Connect policy change, what was essentially done was blocking “round-trip trading.” Mainland investors should not have been buying A-shares by circumventing the system through Hong Kong brokerage firms. Therefore, after the rule revisions, they provided a clear transition period before finally switching to “selling only and no buying,” which is quite simplistic in its logic.

The rectification effort in 2026 is more complex. It targets the entire illegal cross-border operating chain for securities, futures, and funds, not merely a single trading interface. The public scope simultaneously covers:

Illegal Solicitation
Illegal Account Opening
Illegal Entrusted Trading
Illegal Promotion and Traffic Generation
Cooperation in Cross-border Fund Transfer

Issue one is complex, and the execution might not be able to provide a nationally unified, front-end standardized, and text-copy consistent “buying ban starting at 00:00 on Month X Day X,” as last time.

Furthermore, this time specific institutions have been named, and it also simultaneously mentions “proposed confiscation of all illegal gains and severe penalties according to law.” This suggests that it is not merely institutional optimization but also carries a distinct regulatory enforcement aspect. The pace of these enforcement actions often depends on various factors such as cautioning individual companies, rectification plans, system upgrades, customer notifications, and fund acceptance arrangements, and therefore cannot be summarized by a simple timeline.

Therefore, the Shanghai Stock Connect case can only serve as a reference: there may be processing time for both systems and clients between the issuance of regulatory rules and front-end execution. However, it does not mean that we can assume there will certainly be another full year of normal investment/trading activity this time.

Two-year window, not two years of free buying

This is the most crucial point I want to remind you of. (Or, depending on context: This is a key point I would like to emphasize.)

In the plan from the eight departments and the CSRC’s answers to media inquiries, the main official stance publicly given is: during the concentrated rectification period, accepting buy orders from existing investors is prohibited; only selling held securities and transferring funds out are permitted. In other words, according to public policy disclosures, “two years” describes a window for clearing existing business volumes/positions, not an allowance for continued free trading.

Why do many people misunderstand?

Because everyone naturally recalls the time of the Shanghai Stock Connect initiative: “Since they gave [us] a year before, it suggests that this time might also drag on for a long period; the front end won’t necessarily move quickly.” This deduction is not entirely unreasonable, but it can only be considered an inference, not a fact.

The more stable order of understanding is:

The public regulatory stance has shifted to “sell only, no buying.”
We must wait for announcements from each respective brokerage firm regarding the exact date of full implementation on their apps.
Before the official announcement, we cannot assume the opposite—that buying can continue normally/for a long time by default.

The order of these three sentences cannot be reversed. For users, the most dangerous thing is not selling early or late, but misinterpreting the regulatory cleansing window as a trading grace period.

What’s most valuable for investors is not guessing dates, but monitoring signals

If you are genuinely using this type of broker, the signals you should pay attention to most are the following public indicators. Do not treat community screenshots as final rules, nor should you extrapolate the buyable status from other people’s accounts onto your own account.

Signal	Why it is important	Reason more useful than rumors
Official announcements from brokerage firms	Determines when your account switches to sell-only mode	This is the most direct and effective document regarding your account.
Changes in deposit/withdrawal paths	Often precedes the full implementation of trading restrictions	Banking, payment, and foreign exchange channels will tighten up first.
Copywriting adjustments on the App, official website, and account opening pages	Reveals whether new customer acquisition and existing services are being separated	Closer to the execution level than second-hand interpretation.
Asset transfer/withdrawal arrangements	Determines if you can only sell, or if migration paths still exist	This is the core of subsequent loss control.

From historical experience, what truly impacts the account experience are often not the regulatory slogans themselves, but these execution details. At the user level, actions should focus on risk inventory concerning holdings, cash, transfer paths, and withdrawal paths, rather than interpreting this matter as a short-term trading opportunity.

My Conclusions

The Shanghai Stock Connect incident gave the market a clear benchmark: there was an approximate one-year gap between the rules taking effect and the actual buy restriction, with a very specific final date.

However, we cannot mechanically apply [this] time. The reason is not that the regulation will be gentler; quite the opposite. It is because its scope of rectification is broader, its enforcement nature is stronger, and the involved chain is longer. Therefore, “the public stance has already become stricter” and “the unified buy ban date for the front end has not been fully disclosed” will coexist simultaneously.

In other words:

Confirmed Fact: The current public regulatory requirement is no longer like the “retaining normal transactions” model from 2022.
Unconfirmed Fact: That all brokerage firms will cut off buying on the same day and using the same method.
Most Dangerous Misjudgment: Understanding the “two-year clearing period” as meaning you can still buy for two years like before.

Next time, we will broaden the scope to the platform side: why is it that merely mentioning internet brokerage firms like Futu and Tiger, as well as other Chinese listed brokerages, guarantees safety?

References

Several Provisions on the Connect Scheme for Equities between Mainland and Hong Kong Stock Markets (CSRC Order No. 200)
Hong Kong Exchanges and Clearing Limited Participant Notice CT08822E: Implementation Arrangements Regarding Restrictions on Mainland Investors Participating in Northbound Trades
Futu Help Center: Arrangements for Mainland Investors Participating in Shanghai-Shenzhen Stock Connect Trading
Eight Departments Jointly Issued ‘Work Plan for Special Action to Comprehensively Rectify Illegal Cross-border Securities, Futures, and Fund Operations’
[CSRC Spokesperson Answers Journalists on Special Actions to Comprehensively Rectify Illegal Cross-border Securities, Futures, and Fund Operations](https://www.csrc.gov.

Writing Notes

Original Prompt

Today's breaking news regarding Hong Kong and US stock trading involves illegal cross-border business activities, leading to serious investigations into institutions like Tiger Securities. Futu and Tiger stocks dropped 40% pre-market. Let's first review the last inspection action by the China Securities Regulatory Commission (CSRC). Last time, it completely restricted mainland users from opening accounts, but existing clients were unaffected. This time, transactions for existing clients are being prohibited. Back in last year or even two years ago, Hong Kong stockbrokers were banned from facilitating Mainland customers trading via Stock Connect. I searched for relevant policies and confirmed the time gap between policy implementation and brokerage execution: how long did it take before mainland users were prohibited from buying? Today's news says there is a two-year grace period for users to liquidate their holdings, but it doesn't specify when the ban on buying will begin, nor does it detail the lookback period for illegal gains. Even though Futu issued an announcement stating that as of the end of Q1 2026, the proportion of Mainland Chinese clients in terms of assets held accounted for only 13% of the group's total asset base, overseas client assets continue to climb due to the group's effective international strategy. The key metrics are not just client count, but also asset scale and transaction volume. The stock price is still falling; it hasn't recovered. There are many related events; I will structure a timeline and break them into a series of articles. This time, eight departments have intervened! They are comprehensively rectifying illegal cross-border operation of securities, futures, and fund businesses, naming Futu, Changqiao, and Tiger—typical internet brokerages. What about the other brokerage firms? How will they be

This rewrite retained the timeline and official terminology regarding the Shanghai stock deferral/extension process, but changed the central focus of the second article to "the two-year window must not be misunderstood." It does not provide specific operational recommendations, nor does it infer effective dates for any brokerage firm, thereby ensuring that regulatory facts are not written as trading instructions.

Illegal Cross-border Exhibition Rectification (Part 1): Redrawing the Boundaries of Existing Accounts

Fri, 22 May 2026 20:30:00 +0800

Investigations into Hong Kong and US stockbrokers caused initial price drops, with account issues only truly pressing upon users later. The most critical change this time is not the issuance of another regulatory statement, but rather the boundary shifting from “don’t allow new entrants” to focusing on “how existing players should exit.”

During the last inspection, many understood that domestic users could no longer arbitrarily open new accounts, but those who already had accounts could continue trading. This boundary provided both the platform and the users with a buffer zone, making the existing accounts appear as a gray but maintainable historical burden.

This set of articles should be split into three parts: The first article will only focus on regulatory boundaries, the second will cover how accounts can be operated/affected, and the third will discuss how platforms and other brokerage firms should re-price. We must clarify the boundaries first; otherwise, we risk mixing user operations, company valuations, and industry rectification all together.

2022 is for locking new additions, 2026 is for managing existing stock

Let’s unfold the timeline; many misjudgments come from conflating these two rounds of remediation into a single event.

Date	Public Action	Core Guidelines
2022-12-30	CSRC promotes rectification of illegal cross-border business expansion by Futu and Tiger Brokers	Effectively curb incremental growth, orderly resolve existing volume; stop new account openings, allow existing clients to continue trading.
2023-02-15	CSRC answers reporters, scope expanded to overseas subsidiaries of mainland securities firms	Unified supervision for similar businesses; will not arbitrarily restrict existing client trading.
2026-05-09	Eight departments jointly issue implementation plan	Comprehensive rectification of illegal cross-border securities, futures, and fund operations.
2026-05-22	Plan publicized, CSRC simultaneously answers reporters and names three institutions	Existing investors are only allowed to sell and transfer funds, prohibited from buying; concentrated rectification period is two years.

In 2022, the regulation was focused on turning off the faucet, preventing new water from coming in. For 2026, it is no longer only about restricting additions; rather, it involves starting to drain existing “old water.” The most essential difference between the two can be summarized in one sentence:

In 2022: Existing clients can continue to trade.
In 2026: Existing clients cannot buy any more; they can only sell their held securities and transfer the funds out.

This is why the market reaction was so significant. For internet brokerage firms, restricting new account openings harms the growth trajectory; while existing clients only selling rather than buying damages trading activity, retention rates, capital accumulation/settlement, margin trading and securities lending, and wealth management conversion. The former signals a slowdown in the growth narrative, and the latter implies a re-evaluation of the entire business model.

Many areas have been clarified, while those yet to be public are also extremely crucial

Regarding the external dimensions/opening diameter, quite a few parts have actually been clearly specified.

First, the object of regulation is not merely the app name, but the entire “illegal cross-border investment chain.” The plan from the eight departments states this very clearly, aiming to comprehensively rectify activities such as illegal solicitation, account opening, trading, fund transfer, and promotional traffic channeling. Furthermore, the CSRC (China Securities Regulatory Commission) defined the issue during a press briefing as a new type of illegal and non-compliant activity that is “more covert and poses greater danger.”

Secondly, the severity of the actions is heavier than in 2022. The CSRC’s public statement on May 22nd was escalated to “intended to confiscate all illegal gains of related entities of Tiger, Futu, and Changqiao both domestically and internationally, and severely penalize according to law.” Later that day, the own SEC disclosures from the two US-listed platforms pushed the market’s most concerned point—the “magnitude”—forward one step: Futu, according to its public statement, has proposed total fines and confiscations roughly at 1.85 billion RMB; while Tiger disclosed that the combined amount already fined and confiscated is approximately 411 million RMB.

Third, they gave a two-year concentrated rectification period. This “two years” is very important, but it cannot be simply understood as “everything remaining the same for two years.” The public statements suggest exactly the opposite; during the intensive rectification period, existing clients are required only to sell and not buy. The two years are more like a clearance window, not a free trading window.

What truly unsettles the market are the sections that have not been fully disclosed. These gaps cannot be filled by rumors, nor can they write out implementation dates for regulators.

Regarding the buy prohibition, when exactly will it take effect on the front-end systems of various firms? The public materials do not provide a unified and fixed date.
How was the total amount of RMB 1.85 billion related to Futu broken down? The public documents have not yet elaborated on how this is allocated among illegal gains, penalty multipliers, and the involved parties.
What is the subsequent plan for existing assets—will they be liquidated and exited, transferred to a compliant channel, or will the

These ambiguities will directly translate into valuation discounts. Because the worst-case assumptions are unknown, the market will initially calculate based on overly conservative standards.

The “13% Customer Count” Does Not Influence the Estimation

A statement from Futu in its response that has circulated widely is: “As of the end of Q1 2026, the proportion of asset clients in mainland China relative to the group’s total number of asset clients has dropped to 13%, while overseas asset clients continue to climb.”

This finding cannot be dismissed as useless, but it is nowhere near enough to calculate the potential impact on profit.

The problem is that it only gave the “percentage of customers,” but did not provide the two most critical items:

Proportion of Mainland Client Assets
Share of Transaction Volume or Commission Contribution from Mainland Clients

These two items are unavailable, so the 13% figure cannot be directly mapped to the profit impact. Online brokerages fear this kind of metric misalignment: fewer clients do not mean lower assets, nor does it mean weak trading activity. Especially long-term users often have larger capital, higher turnover rates, and stronger financing needs; the commercial value of a single account may not be low.

What can be seen in Futu’s recently disclosed financial reports is that the group’s overall metrics are still very strong. Both the 2025 annual financial report and the yearly report disclose that total client assets have reached HKD 1.23 trillion, 2025 revenue was HKD 22.8 billion, and funded accounts amounted to 3.365 million. This indicates that the company’s internationalization efforts over the past few years have genuinely taken off. However, this same set of public materials does not separately break down “the proportion of assets and transaction volume from mainland Chinese clients.”

Therefore, it is normal that the market is currently skeptical. It’s not a lack of belief in internationalization; rather, they are unsure what residual weight or potential mainland existing clients hold regarding asset and transaction activity dimensions. Client count is a headcount metric; valuation cares more about metrics related to assets, transactions, financing, and monetization.

This is not a typical negative factor for fines

Failing to recover quickly after a pre-market drop exceeding 40% was fundamentally due to the non-linear nature of this downward pressure/negative catalyst.

If it were merely fines in the tens of millions, the market would account for a one-time loss. However, the current public figures have been raised to approximately RMB 1.85 billion for Futu and RMB 411.2 million for Tiger, a magnitude that is clearly not a “small scratch.” If it were only about stopping new additions, the market would estimate slowing growth. But if the rule becomes “existing inventory only allowed to be sold, not bought,” what the market must re-evaluate is:

\[ \text{Future Valuation} \neq \text{Current Customer Count} \times \text{Simple Discount} \]

It’s more like a three-layer discount happening simultaneously:

Decline in transaction frequency
Account asset outflow
Rising compliance costs and uncertainty

To add another layer: whether we can still achieve incremental growth through the grey areas in the future; the current public narrative has essentially eliminated any room for speculation.

Therefore, this wave of stock price movement is not merely an emotional fluctuation; it seems more like regulators bringing a long-standing but unpriced risk onto the table all at once. The difficulty isn’t ‘how much they will fine,’ but rather how to monetize or convert the remaining existing assets/volume into revenue.

My Current Assessment

My judgment is straightforward: The round of enforcement on May 22, 2026, will not be a rerun of the old news from 2022, but rather an upgraded version of the previous cleanup effort. Furthermore, it has shifted from “forbidding continued expansion” to “requiring the shrinkage of existing capacity.”

For investors holding stocks such as Futu or Tiger, what they should pay attention to next is not community sentiment, but three types of public information:

Each brokerage firm’s own implementation announcement, especially the start date of buying restrictions
The calculation methodology/scope for “illegal gains” in penalty documents or subsequent formal decisions
Whether there are supporting measures such as asset transfer, account categorization, or regional isolation

This article first clarifies “what exactly distinguishes this time from the last time.” The next article will separately analyze the implementation window: referencing the period between policy implementation and when Hong Kong stock brokers truly prohibited buying on their front ends for mainland clients utilizing Stock Connect. While this reference point helps with understanding, it cannot be mechanically applied to this current rectification effort.

References

Notes on Writing

Original Prompts

Today's sudden news regarding HK/US stock trading involves illegal cross-border operations, with institutions like Tiger Securities being seriously investigated. Futu and Tiger fell 40% before market open. First, let's review the last regulatory investigation by the CSRC (China Securities Regulatory Commission). That time, it completely locked down new account openings for domestic users, but existing clients were unaffected. This time, however, trading for existing clients is being restricted.
Last year or the year before, Hong Kong stock brokers were banned from doing business with mainland clients transacting through Stock Connect. Searching for relevant policies and confirming how long there was an interval between policy implementation and broker enforcement: banning mainland users from buying? Today's news says there will be a two-year grace period to clear out holdings, but it doesn't specify when the ban on buying will begin. It also doesn't specify how long the illegal gains will be retroactively tracked. Even though Futu issued an announcement, as of the end of Q1 2026, the proportion of asset clients in Mainland China relative to the group's total asset client base has dropped to 13%. Meanwhile, under the group's effective internationalization strategy, the number of overseas asset clients continues to climb. Only customer numbers are available; asset size and trading volume percentage are the two critical factors missing. The stock price is still dropping; it hasn't rebounded. Many related incidents have occurred; compiling a timeline and splitting this into a series of articles. This time, eight departments are involved! They comprehensively rectified illegal cross-border operation of

This rewrite retains the original manuscript's timeline, official documents, and company disclosure narratives, but narrows the scope of the first article to "the difference between newly added restrictions and existing inventory disposal." The account execution window and other brokerage differentiations will no longer be covered in this piece; they are reserved for the following two articles.