China rewrites the rules on mainland wealth access

The China Securities Regulatory Commission (CSRC) and seven other Chinese government departments, acting under a plan approved by the State Council, moved on 22 May 2026 to dismantle a cross-border investment ecosystem that grew to serve more than 30 million registered users and accumulate more than $214 billion in combined client assets across two listed platforms, Futu and Tiger, alone.

Administrative penalties were imposed on three major brokerage firms, and the HKMA simultaneously issued a circular setting new compliance requirements for mainland Chinese investors opening investment accounts in the city.

A spokesperson for the HKMA said in a statement to media on 7 June: "The banking industry has implemented the new regulatory requirements set out in the HKMA circular to ensure the account opening process is compliant and orderly. Chinese mainland customers continue to apply for opening accounts, and in general, the account opening process has been operating smoothly." The statement was designed to counter reports circulating on mainland social platforms that Hong Kong banks were rejecting applications wholesale. It was the most visible sign of a shift in policy that had been building for more than three years.

The CSRC had first formally declared the illegality of such cross-border brokerage operations on 30 December 2022, ordering the platforms to stop expanding their mainland client base and cease opening new accounts. For three and a half years the platforms operated within those restrictions. The May 2026 enforcement, executed through a State Council-approved plan spanning eight government departments, marks the conclusion of that process, not a course correction, but a structured, state-directed wind-down reaching its final stage.

The scale of what is being wound down

Futu Holdings Limited, the Nasdaq-listed parent of Futu Securities International and the Moomoo trading platform, reported in its first quarter (Q1) 2026 earnings release of 28 May 2026 that it had 3.59 million funded accounts as of 31 March 2026, total client assets of $155.8 billion, a 47.2% increase year- on-year (YoY), and total quarterly revenue of $746.9 million, up 25% year on year. UP Fintech Holding Limited, the Nasdaq-listed parent of Tiger Brokers, reported in its Q1 2026 earnings release filed with the US Securities and Exchange Commission (SEC) on 2 June 2026 that funded accounts reached 1,282,800, total client assets stood at $58.9 billion and quarterly revenue was $154.9 million.

Futu provisioned for the proposed RMB 1.85 billion ($271 million) CSRC penalty charge in its Q1 2026 accounts, pulling net income down 61.2% YoY to HKD 831 million ($106 million). The formal administrative penalty pre-notification letter and Futu's SEC disclosure were both dated 22 May 2026, after Q1 had closed. Without the penalty charge, net income would have risen 36% YoY. For UP Fintech, the CSRC fine sat in the "others, net" line of the income statement, swinging that line to a $64.1 million expense and pulling the pretax result into a $16.5 million loss. The company reported a net loss attributable to ordinary shareholders of $26.9 million for Q1 2026, against net income of $30.4 million a year earlier. Both companies are widely held by international institutional investors; the scale of the penalty impact signals to global fund managers that mainland regulatory risk must now be assessed alongside financial performance when sizing positions in Chinese fintech companies listed overseas.

What the filings disclose

The legal basis for the enforcement is set out in both companies' mandatory SEC disclosures. Futu Holdings filed a Form 6-K on 22 May 2026, disclosing that certain Futu entities had conducted securities business, public fund sales business and futures business in mainland China without the requisite licences, in violation of China's Securities Law, Securities Investment Fund Law and Futures and Derivatives Law. The CSRC proposed a total penalty of approximately RMB 1.85 billion (approximately $271 million) and a personal fine of RMB 1.25 million (approximately $183,575) against Li Hua, Futu's founder and chief executive officer. Futu disclosed that mainland China-funded accounts constituted approximately 13% of its total funded accounts as of the end of Q1 2026.

UP Fintech's Form 6-K disclosed that the CSRC Beijing Bureau had found that the subsidiaries had conducted unlicensed cross-border securities, fund and futures business in mainland China. The bureau imposed administrative penalties and confiscated illegal income totalling approximately RMB 411 million (approximately $59.7 million). Tianhua Wu, chairman and CEO of UP Fintech, received a warning and a personal fine of RMB 1.25 million (approximately $183,575). Wu described the penalty as a "one-off expense" that "will not have a material adverse impact on our business operations or long-term development." Futu stated that the proposed penalty "remains subject to further proceedings and the final determination by the CSRC" and that the company "will fully cooperate with the CSRC and exercise its lawful rights to safeguard the legitimate interests of the company and its shareholders." No primary public disclosure of Longbridge Securities' specific penalty amount has been confirmed at the time of publication.

 A State Council mandate

On 25 May 2026, China's State Council Information Office published the official account of the enforcement via Xinhua. The announcement confirmed that the CSRC would move against all three platforms for activities that had "violated China's laws and regulations concerning securities, funds and futures, and have disrupted market order." The State Council Information Office disclosed that the CSRC and seven other government departments had jointly issued an implementation plan, approved by the State Council, to "comprehensively eradicate illegal cross-border securities, futures and fund operations" within a two-year rectification period. A plan coordinated across eight agencies at the State Council level is an expression of state policy at the highest level of the Chinese executive, not a targeted action against specific firms.

During the two-year wind-down, overseas institutions are strictly prohibited from facilitating new buy orders or capital inflows for existing mainland investors; only sell orders and withdrawals are permitted. Upon expiry, affected institutions must shut down mainland-targeted websites, applications and servers. Mainland investors may continue to access overseas markets through the Stock Connect programme, the Qualified Domestic Institutional Investor (QDII) scheme and the Cross-boundary Wealth Management Connect.

From 12 June 2026, Futu Securities International, Tiger Brokers and Longbridge Securities are required to cease accepting deposits and new buy orders from mainland-registered accounts. Existing clients may execute sell trades and initiate outgoing transfers during the two-year wind-down period. For the hundreds of thousands of mainland investors who held equity positions through Futu and Tiger, the next two years represent an orderly exit, not an ongoing service.

What the HKMA now requires of banks

On 22 May 2026, the HKMA issued circular B1/15C, titled "Expected controls for account opening and maintaining relationships with clients with investment accounts," to all authorised institutions operating in Hong Kong. Arthur Yuen, deputy chief executive of the HKMA responsible for the full range of banking policy, supervision, conduct and enforcement, oversees the regulatory function from which this circular was issued. The measures apply exclusively to mainland Chinese individual investors; non-investment services and corporate clients fall outside their scope.

The central requirement is a written declaration confirming that all funds used to support investment activities originate from lawful sources outside mainland China. Failure to provide the declaration or supporting documentation gives the bank grounds to refuse the account. Previously, the question of fund origins was addressed through banks' internal know-your-client procedures without a specific client-signed attestation; the new requirement places a written, client-executed record into every new investment account opening. For clients with clearly documented offshore asset structures, it is a formality. For those whose offshore funds lack clear provenance documentation, it is a threshold the bank cannot cross on their behalf.

The circular also requires banks to commission an independent third-party audit of investment accounts opened since January 2023 and to close any found to have been opened with suspicious or forged documents within three months. Zero-balance accounts with no client-initiated activity in the 12 months preceding 22 May 2026 must also be closed.

On the same date, the Securities and Futures Commission (SFC) issued a parallel circular (reference 26EC29) to licensed corporations, setting equivalent controls for mainland Chinese individual investors. The SFC based the circular on a review of account-opening practices at 12 licensed brokers, in which it found instances of questionable and forged client documentation and deficient ongoing monitoring. Private banks that hold both HKMA authorisation and SFC licences, which cover most international private banks operating in Hong Kong, are subject to both sets of requirements simultaneously.

What this means for wealthy mainland investors

For mainland high-net-worth (HNW) individuals winding down Futu or Tiger positions, three legal channels remain. The Stock Connect programme allows mainland investors to trade Hong Kong-listed shares and a defined set of eligible HK-listed exchange-traded funds (ETFs); it does not extend to US equities or other overseas markets. The QDII scheme permits investment in overseas funds through mainland-licensed institutions that hold regulatory quota allocations from China's State Administration of Foreign Exchange; individual investors access QDII indirectly through fund products offered by those institutions. The Cross-boundary Wealth Management Connect allows Guangdong residents to invest in Hong Kong-listed financial products through approved banks, subject to an individual investment quota of RMB 3 million (approximately $414,000) per investor, raised from RMB 1 million (approximately $138,000)in February 2024.

None of these channels replicates the direct global equity access that Futu and Tiger provided. Stock Connect is confined to Hong Kong-listed shares and eligible HK-listed exchange-traded funds (ETFs); it does not extend to US equities or other overseas markets. QDII gives investors indirect exposure through managed fund products, not direct securities trading. The Cross-boundary Wealth Management Connect covers Hong Kong-listed investment products but not direct equity brokerage across multiple markets. For HNW investors who require bonds, structured products, private funds or direct access to US or other overseas markets, a Hong Kong private bank operating under HKMA oversight is the most direct compliant path available within Hong Kong's regulated framework. An investor with clearly documented offshore capital, including prior remittances, property sale proceeds or assets held through a trust, will find the declaration straightforward to complete. An investor with less documentation should work through the provenance question with a private bank relationship manager before opening a new account.

Hong Kong's private banks at a crossroads

The brokerage platforms being wound down were the entry point through which many emerging-affluent and HNW mainland Chinese investors first engaged with Hong Kong's financial ecosystem. That route is now closed. Private banks that have built clear, compliant onboarding processes for mainland HNW clients are well placed to absorb those displaced relationships.

Singapore and Dubai could potentially benefit if mainland investors conclude that Hong Kong's new compliance framework is too cumbersome, though the extent of any shift will depend on individual investor circumstances and the broader regulatory environment. Singapore's variable capital company structure and single family office incentive scheme have already attracted a significant number of mainland Chinese principals. The Dubai International Financial Centre (DIFC) has positioned itself as an alternative booking centre for Asian wealth, offering comparable privacy and asset protection within a Gulf regulatory framework. Neither jurisdiction imposes the written declaration requirement the HKMA now requires. Private banks operating across all three centres will face client conversations about whether to formalise a Hong Kong relationship or consolidate assets elsewhere.

Beijing has committed at the highest executive level to closing informal cross-border channels within a defined two-year window. What follows is an environment in which every remaining route to Hong Kong's private banking system is formal, regulated and monitored by eight Chinese government departments. Private banks that have their mainland compliance in order will absorb the clients the brokerage platforms can no longer serve.