China Tightens Overseas Investment Rules, Fines Three Brokers for Loophole Violations

U.S. after the China Securities Regulatory Commission ordered that investors may purchase overseas stocks only through official channels. The commission fined Futu Holdings, Tiger Brokers and Longbridge for permitting Chinese investors to buy overseas shares through a loophole.

Hong Kong authorities began reviews of 12 other companies. Investors at the three brokerages may sell assets and withdraw funds over the next two years but cannot buy new shares. Citic Securities estimates that up to $32 billion in mainland Chinese investor assets could be affected.

Brokers in China and Hong Kong are tightening compliance rules for accounts that invest in overseas equities. -listed shares of the three sanctioned firms fell nearly 30 percent after the fines were announced before recovering. Futu Holdings, Tiger Brokers and Longbridge each said they will comply with the new regulations.

The China Securities Regulatory Commission did not respond to a request for comment from Benzinga. The regulatory actions follow data showing an estimated $1 trillion in capital left the mainland in 2025. The Financial Times reported the measures on Tuesday.

Demand for overseas equities remains strong. 9 billion, or $55 billion, with retail investors accounting for more than 85 percent of the total. The tightening comes after SpaceX and Anthropic announced IPO details.

6 million shares at $135 each in a $75 billion offering.