Futu Holdings, UP Fintech skid down after reports on Chinese regulation
Futu Holdings shares slump 7.9% in premarket trading after Reuters reports that Chinese regulators plan to prohibit online brokerages from providing offshore trading services to mainland customers.
Chinese regulators are planning to bar online brokerages, such as Futu and UP Fintech, from providing offshore trading due to capital outflows and data security concerns, according to the Reuters report. Futu responded, saying the reports are media speculation. UP Fintech stock sinks 9.7%.
“To date, the company has not received (nor is it aware of) any notice, guidance or order from any PRC [People’s Republic of China] regulatory authorities which is expected to have a material adverse impact on its business operation or financial conditions,” Futu said in a statement.
The company said it’s complying with the same rules and regulations and adopting similar industry practices as other brokers who hold the same type of licenses in Hong Kong.
“There is no such ‘internet broker-dealer’ category or definition under the relevant legal framework,” it said.
It also alleges that some individuals and institutions are spreading false information about Futu on social media “with the purpose of profiting from short-selling.” It has gathered relevant information and shared it with regulators. “We also reserve our right to take legal action.”
In October, Futu and UP Fintech shares tumbled after China’s central bank warned that online brokerages that aren’t licensed in China are operating illegally if they’re serving Chinese clients through the internet.
Author: Liz Kiesche, Seeking Alpha