As regulatory enforcement against illegal cross-border securities businesses escalates, prominent online brokers including Futu Holdings and Longbridge Securities have initiated cleanup procedures for existing accounts. The move primarily targets accounts opened using falsified documentation and long-term dormant accounts devoid of assets or holdings. The initiative aims to implement a comprehensive rectification scheme jointly issued by multiple departments. This plan mandates a two-year concentrated campaign to firmly ban illegal operations while ensuring the orderly clearance of existing stock. Regulators have previously launched investigations into certain institutions conducting securities business illegally within the mainland, with plans to confiscate illicit gains and impose severe penalties.
Reports indicate that the cleanup scope explicitly identifies two categories of high-risk accounts. One category comprises investment accounts opened in violation of regulations by forging materials such as overseas addresses and utility bills to substantiate foreign residency. The other consists of idle accounts with zero balances and no transaction history. Brokerage firms stated that relevant screening commenced in the system during the second half of 2025 to align with anti-money laundering and customer due diligence requirements. For clients who opened accounts compliantly and hold genuine assets and positions, the platforms emphasized that these are excluded from the cleanup scope to alleviate market concerns.
Under policy arrangements, the management of existing accounts over the next two years will follow a defined pathway. During the concentrated rectification period, overseas institutions are prohibited from providing buy-order execution or fund deposit services to existing mainland investors; only sell-order execution and fund withdrawal services are permitted. Once the concentrated rectification period concludes, relevant institutions must fully shut down their mainland-facing websites, trading applications, and supporting servers, completely barring any illegal trading services for existing investors. Regulators specifically noted that forced liquidation or asset confiscation will not occur during the process. Investor asset safety is protected, and platforms are required to maintain communication and provide reasonable transitional arrangements.
Addressing market concerns regarding future access to Hong Kong or US stock markets, this rectification signifies the severance of illegal channels. Direct account opening and trading pathways for unauthorized overseas brokerage platforms within the mainland will be permanently closed after the transition period, though legal channels remain operational. Investors may continue overseas investments via legally approved avenues such as Stock Connect, QDII funds, and the Cross-Boundary Wealth Management Connect. Industry analysis suggests this marks the entry of illegal cross-border securities governance into a normalized phase. Institutions like Futu and Longbridge are expected to release more detailed implementation rules in the coming months. Existing investors should monitor platform notifications closely to appropriately manage account assets within the transition window.
