Latest Developments and Interpretation of the Futu and Tiger Brokers Client Wind-down Event

Both brokerages have just held conference calls with analysts and announced their fine amounts. Overall, the two types of regulatory actions this time—fines and the wind-down of existing business—are relatively mild:

1. Fines: The preliminary fine amounts for both institutions have been announced, which are overall lower than market expectations (Futu: 1.85 billion yuan, Tiger: 410 million yuan).

2. Wind-down of existing business: This control measure is centered on the client's actual place of residence (physical jurisdiction). The overseas trading and fund transfers of existing mainland clients are unaffected. On the domestic side, only selling and fund withdrawals are allowed.

3. Details of the wind-down: It does not require mainland clients to liquidate their stock holdings and close their accounts within two years. Instead, it involves shutting down the domestic web servers after two years, prohibiting trading activities within mainland China. Clients located overseas can still deposit funds and trade normally.

4. Scope of application: The new rules apply to all overseas institutions, covering all overseas financial entities providing securities services to mainland clients. It is not only targeting Futu and Tiger Brokers but also includes overseas banks providing securities-related services.