Chinese online brokers Futu and UP Fintech face regulatory risks – People’s Daily website

SHANGHAI, Oct. 14 (Reuters) – US-listed Chinese online brokerages Futu Holding (FUTU.O) and UP Fintech Holding face regulatory risks as China’s new data protection law goes into effect on November 1, the official said People’s Daily in an analysis on its website.

Such brokers, who help mainland Chinese invest in overseas stock markets like the United States and Hong Kong, could violate privacy laws and also pose compliance risks, the article said.

China has launched a spate of raids targeting sectors ranging from technology to cryptocurrency to real estate. The People’s Daily article could bring Chinese online brokers into regulatory crosshairs next.

From November 1st, China will implement the Personal Data Protection Act, which complements the Data Protection Act in regulating cyberspace and protecting national security.

The new rules will regulate the export of personal data and pose a challenge to online brokers providing cross-border trading services to mainland Chinese citizens, the People’s Daily said.

Brokerage firms such as Futu and UP Fintech do not have brokerage licenses in the mainland, but Chinese citizens can open accounts online after submitting personal information on ID cards, bank cards and tax records, the article said, adding: collected, where is it going? “

Online brokers, which include Snowball Securities, are also exposed to terms and conditions compliance risks, the article said.

Currently, Chinese investors can invest in foreign securities markets through the cross-border Connect programs and through Qualified Domestic Institutional Investors (QDII).

Aside from these two channels, China’s securities regulator has not allowed any institution to offer cross-border trading services to domestic investors, People’s Daily said.

Reporting by Samuel Shen and Emily Chow Editing by Toby Chopra and Mark Potter

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