14 Aug 2026

Partner Kenneth Leung Recognised in Asian Legal Business Hong Kong Rising Stars 2026

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11 Aug 2026

Closing the Loophole: Inside China’s Crackdown on Offshore Brokerages

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China’s securities regulator has fired its most significant shot yet in a years-long campaign against unlicensed cross-border brokerages. On 22 May 2026, the China Securities Regulatory Commission (“CSRC”), acting jointly with seven other government departments, announced it would impose firm and decisive enforcement action against (坚决予以打击)[1] three of the region’s most prominent online brokers:

Tiger Brokers (NZ) Limited;
Futu Securities International (Hong Kong) Limited; and
Longbridge Securities (Hong Kong) Limited.

These coordinated actions — resulting in proposed penalties exceeding RMB 2.3 billion (~HK$2.67 billion), a mandatory two-year wind-down of mainland-facing operations, and a parallel Hong Kong regulatory response from the Securities and Futures Commission (“SFC”) — underscore Beijing’s determination to close unlicensed cross-border brokerage channels and reassert control over cross-border capital flows.

In this newsletter, our Regulatory Enforcement and Compliance team provides an overview of the CSRC’s findings, the mechanics of the rectification scheme, the SFC’s parallel action, and the critical takeaways for brokers, asset managers, and fintech platforms operating across the Hong Kong–Mainland border.

CSRC’s position

On 22 May 2026, the CSRC announced it would impose firm and decisive enforcement action against on Tiger Brokers (NZ), Futu Securities International (Hong Kong), and Longbridge Securities (Hong Kong) for “illegally conducting securities business within China”, stating their activities violated China’s securities, funds and futures laws and disrupted market order (破坏了市场秩序).

Specifically, the CSRC found that the three firms had, without mainland licenses, solicited mainland investors, executed trades, and offered fund and futures brokerage services in breach of the PRC Securities Law. The CSRC formally opened cases against both onshore and offshore entities of all three firms.

The CSRC’s announcement can be accessed here.

The penalties are significant. The CSRC proposed roughly 2.3 billion yuan (HK$2.67 billion) in confiscations and fines against the two firms and their founders, penalizing them for providing securities marketing and order-processing services on the mainland without the required licenses. The heaviest impact falls on their mainland client base. Drawing on end-of-2025 figures, the two firms are expected to wind down roughly 570,000 to 630,000 mainland-funded accounts over the coming two years, collectively holding between US$27 billion and US$29 billion in assets.

This enforcement action did not arise in isolation but represents the culmination of a multi-year regulatory campaign. The CSRC first flagged the issue in October 2021 and then formally acted on 30 December 2022[2], finding that Futu and Tiger Brokers had been operating a cross-border securities brokerage business for mainland residents without the requisite CSRC licence or approval. The CSRC accordingly ordered both firms to stop onboarding new mainland clients, though existing account holders were still permitted to trade and withdraw funds.

In response, Futu and Tiger withdrew their apps from mainland app stores in mid-2023, and by September 2023 the CSRC told brokerages based in offshore jurisdictions such as Hong Kong to stop offering securities trading accounts to new mainland investors, according to a Sept. 28 notice issued by its Shanghai unit. Compliance gaps persisted over the following two years, and a parallel 2026 Securities and Futures Commission review of 12 licensed brokers uncovered continued weaknesses, including inadequate due diligence on account opening documents, acceptance of forged or questionable documentation, and insufficient verification of clients’ cross-border correspondent relationships.[3]

The Legal Mechanism — Two-Year Rectification Plan

Alongside the enforcement action, the CSRC and seven other government departments jointly issued the “Implementation Plan for the Comprehensive Rectification of Illegal Cross-Border Securities, Futures and Fund Business Activities”[4], approved at the State Council level. The plan sets a two-year rectification period (集中整治期) to wind down existing illegal business, rather than terminate it outright.

During this period, affected brokers may only process sell orders and withdrawals — no new purchases, deposits, or account openings for mainland ID holders are permitted, and existing services cannot be expanded. Longbridge and Futu have already implemented these restrictions from 12 June 2026. Once the two years lapse, all mainland-facing platforms, apps, and servers must be fully shut down.

Parallel Hong Kong Regulatory Action

Crucially, this was never solely a Mainland story. On the same day as the CSRC’s announcement, the SFC issued its own circular to all licensed corporations[5], referencing the CSRC’s rectification plan directly. The circular followed the SFC’s review of 12 licensed brokers, which uncovered “significant deficiencies” in account-opening due diligence and ongoing monitoring of cross-border correspondent relationships with overseas intermediaries. Some brokers had accepted questionable or forged client documents, with certain accounts later linked to suspicious fund transfers involving no genuine trading activity.

Practical Takeaways for Clients

For SFC-licensed brokers and intermediaries, the priority is a targeted internal review: assess account-opening and beneficial-ownership verification processes for Mainland clients, verify with the clients at issue any accounts opened with questionable documentation, dormant zero-balance accounts, or accounts showing red flags such as shared addresses or bank accounts across unrelated clients. Firms should implement the SFC’s required investor declarations confirming that Mainland clients’ funds originate from lawful sources outside the Mainland. [6]

For asset managers and fintech platforms, this is a prompt to reassess any indirect subscription arrangements, nominee accounts, or omnibus structures that could be characterised as facilitating circumvention of PRC foreign exchange controls, even where the platform has no direct Mainland licensing exposure.

The SFC circular confirms that cross-border introducer arrangements do not dilute accountability, and that breaches of overseas regulatory requirements — including the CSRC’s own rules — may independently constitute a breach of paragraph 12 of the Code of Conduct, exposing licensees to SFC action regardless of the outcome of Mainland proceedings.

Non-compliance carries real consequences: the SFC has stated it has “zero tolerance” for forged documentation, and has warned it may impose external look-back reviews, restrictive licensing conditions under section 116(6) of the SFO, and formal enforcement action affecting a firm’s fitness and properness. Material breaches must also be self-reported to the SFC under paragraph 12.5(a) of the Code of Conduct.

More broadly, all cross-border businesses should treat this as a signal to strengthen senior management oversight of cross-border compliance controls on an ongoing basis, not as a one-off remediation exercise.

If you have any questions or would like to understand how these regulatory developments may impact your business or compliance obligations, please reach out to our Partner Kenneth Leung or our Associate Ronnie Tse.

This article is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

[1] China Securities Regulatory Commission. (2026, May 22). 证监会严肃查处老虎等机构非法跨境展业案件 (CSRC sternly investigates and punishes illegal cross-border business activities by Tiger and other institutions).

[2] China Securities Regulatory Commission. (2022, December 30). 中国证监会推进富途控股、老虎证券非法跨境展业整治工作 (CSRC advances the rectification of illegal cross-border business activities by Futu Holdings and Tiger Brokers).

[3] Securities and Futures Commission of Hong Kong. (2026, May 22). Circular to licensed corporations: Expected controls for account opening and maintaining relationships with clients (Ref. No. 26EC29).

[4] China Securities Regulatory Commission. (2026, May 22). 关于印发《综合整治非法跨境证券期货基金经营活动实施方案》的通知 (Notice on the issuance of the “Implementation plan for comprehensive rectification of illegal cross-border securities, futures, and fund business activities”)

[5] Securities and Futures Commission of Hong Kong. (2026, May 22). Circular to licensed corporations: Expected controls for account opening and maintaining relationships with clients

[6] Securities and Futures Commission of Hong Kong. (2026, May 22). Deficiencies identified in the Review and standards expected of licensed corporations (Appendix B).

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28 Jul 2026

Hong Kong Stock Exchange Issues Guidance Letter on Digital Asset-Related Activities

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28 July 2026

1. Introduction

On 24 July 2026, The Stock Exchange of Hong Kong Limited (the “Exchange”) (wholly-owned subsidiary of HKEX) published a guidance letter (HKEX-GL122-26) to provide clarity on the potential implications under the Listing Rules for new listing applicants and listed issuers engaging in digital asset-related activities, covering continuing obligations and disclosure requirements.

Against the backdrop of rapid technological innovation in global financial markets, the Exchange has observed a growing number of listed issuers involved in digital asset-related activities or exploring such initiatives, ranging from investments in digital assets and stablecoin issuance to tokenisation and the creation of blockchain-based platforms.

While acknowledging the transformative potential of digital assets to bring tangible benefits to the real economy and financial markets, the Exchange remains committed to safeguarding investor confidence and protecting the interests of the investing public.

2. Definition of “Digital Assets”

The definition of “digital assets” is not exclusive, but the Exchange gave some examples that “digital assets” are defined as assets that:

are digital representations of value;
depend primarily on cryptography and distributed ledger technology or similar technologies; and
can be used for payment or investment purposes or to access goods or services.

Examples include tokenised real-world assets (including traditional financial instruments), stablecoins, and cryptoassets such as Bitcoin. While the Exchange caveated that this definition is used solely to explain Listing Rules implications, we note that such definition is generally consistent with those as seen in other Hong Kong regulatory regimes.

3. Suitability for Listing / Continued Listing

New Listing Applicants

Companies that primarily adopt an operating model similar to a “digital asset treasury company” (DAT), i.e., their principal business involves buying and holding digital assets, will unlikely be considered suitable for listing under Chapter 8 of the Listing Rules. By contrast, SFC-authorised exchange-traded funds investing in digital assets may be listed under Chapter 20.

Existing Listed Issuers

Issuers have a continuing obligation to maintain a business that is substantive, viable and sustainable. If an issuer adopts a DAT‑like model, holding digital assets unrelated to its operations, or holding digital assets without any substantive business, it will likely be regarded as lacking sufficient operations under Rule 13.24(1) of the Listing Rules.

Cash Companies

Issuers whose assets consist wholly or substantially of cash and/or short-term investments are regarded as “cash companies” and are not suitable for listing (see Rule 14.82 of the Listing Rules). Digital assets held for investment purposes will likely fall within the scope of “cash and/or short-term investments”. If an issuer is found to be a cash company, trading in its securities will be suspended.

Circumvention of New Listing Requirements

Where an issuer acquires a business holding substantial digital assets and its existing principal business becomes immaterial after the transaction, the Exchange may treat the transaction as a reverse takeover, requiring the issuer to comply with all new listing requirements. Similarly, large‑scale issues of new securities for cash to acquire or develop a new business may be viewed as an attempt to circumvent the new listing requirements, and the Exchange may not grant listing approval for the shares to be issued.

4. Notifiable and Connected Transactions

Acquisitions or disposals of digital assets are generally considered transactions under Chapters 14 (Notifiable Transactions) and 14A (Connected Transactions) of the Listing Rules, regardless of whether they are conducted for investment, treasury or distribution purposes.

Issuers must comply with applicable disclosure and shareholder approval requirements based on transaction size and observe the aggregation rules for transactions involving the same type of digital assets conducted within a 12‑month period.

The Exchange reiterated that advance “blanket approvals” without key transaction terms are generally not acceptable, as shareholders would not have sufficient information to make an informed voting decision. Proposals with key terms will be examined cautiously, and those exhibiting abuses or non‑compliance will not be accepted.

A notable clarification from the Exchange is that acquisitions or disposals of digital assets classified as cash or cash equivalents, namely central bank digital currencies (CBDC) or “other regulated digital monetary value that is authorised or prudentially supervised, designed primarily for payment/settlement and redeemable at par in fiat currency”, will not normally be treated as notifiable transactions. Remarkably, the Exchange has confirmed in this Guidance Letter that an example of such digital representation of monetary value in Hong Kong is any stablecoin whose issuance is authorised by a licence granted under the Stablecoins Ordinance (Cap. 656 of the Laws of Hong Kong).

5. Recommended Disclosure

The Exchange stresses that any disclosure relating to digital asset‑related activities must be accurate, complete in all material respects, and not misleading or deceptive. Disclosure is not required solely because an issuer engages in such activities. However, where disclosure is otherwise required under the Listing Rules, other laws or regulations, or made voluntarily, issuers should include the following information (to the extent relevant):

Description: Detailed description of the activities and underlying operations;
Strategy: Board explanation of why the proposal is in the interests of the issuer and shareholders, and expected source of funding;
Expertise: Management’s expertise and experience in managing the proposed activities;
Risks: Material risks and associated mitigation measures;
RMIC: Risk management and internal control systems (custody, security, monitoring);
Compliance: Applicable legal and regulatory requirements and confirmation of compliance; and
Timeline: Key milestones and expected completion date.

The Exchange also requires additional specific disclosures on:

Acquisition of digital assets: If integral to business operations, then the issuer shall disclose specific purposes, breakdown of amount and timing of deployment; If held for treasury/investment, then the issuer shall disclose treasury strategy, role of digital assets, investment limits/caps, and source of funds (including external financing).
Tokenisation of real-world assets: Disclose identity of token issuer, details of underlying assets (ownership, custody), rights attached to tokens (including redeemability), trading arrangements (marketing platform, blockchain used), and other principal terms.

Issuers should avoid making misleading disclosure or creating unrealistic expectations, particularly at preliminary stages, and should refrain from using generic or boilerplate descriptions when explaining rationale and integration of digital assets.

6. Other Listing Rules Implications

Distribution in Specie

If an issuer proposes to distribute digital assets (including tokenised assets) to shareholders in specie, it must ensure fair and equal treatment of all shareholders. The Exchange will have concerns if the objectives and reasons are unclear, no reasonable cash alternative is offered, certain shareholders are ineligible to receive the distribution, or shareholders cannot readily hold title or realise value from the distributed tokens.

Continuing Disclosure

When issuing equity securities to fund digital asset acquisitions, the announcement must include the recommended disclosure set out above. Issuers must report on use of proceeds in subsequent annual reports, including details of digital assets acquired and their purposes. If a particular digital asset holding represents 5% or more of the issuer’s total assets at year‑end, the annual report disclosure requirements for significant investments apply.

7. RMIC

Issuers are reminded to establish and maintain adequate risk management and internal control (RMIC) systems. For digital asset‑related activities, appropriate RMIC measures commensurate with the nature, scale and complexity of the activities should be implemented, covering:

Compliance with applicable laws and regulations (Listing Rules, SFC/HKMA requirements, AML/CTF, etc.);
Delegation of supervision to designated staff with necessary expertise, and setting approval thresholds and maximum risk exposure;
Due diligence and ongoing monitoring of counterparties and service providers;
Comprehensive security measures (custodian/wallet arrangements, secure storage of private keys, fraud/collusion controls, backup to prevent single points of failure); and
Processes to identify and escalate material issues to the board/management, including procedures for engaging professional advisers where appropriate.

Conclusion

We appreciate the Exchange’s clarification on its stance in relation to digital assets. As the classification of digital assets continues to crystallise and gain broader acceptance, the Listing Rules should be applied consistently with reference to such classifications. While there is indeed a difference in how the Listing Rules treat digital assets in general compared to CBDCs and stablecoins specifically, this distinction is understandable given the latter’s “fiat currency” nature. That said, in view of digital assets’ agility and unique characteristics, appropriate risk management and internal control measures are indeed necessary. The Exchange’s clarity on digital assets is a positive development, and we are confident it will help foster greater innovation and confidence in Hong Kong’s digital asset ecosystem.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

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28 Jul 2026

Stevenson, Wong & Co. Shortlisted for the ALB Hong Kong Law Awards 2026

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9 Jul 2026

Modernising Service of Judicial Documents Between Hong Kong and the Mainland

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On 20 April 2026, the Hong Kong Government and the Supreme People’s Court signed a new Arrangement on Mutual Service of Judicial Documents in Civil and Commercial Proceedings (the “New Arrangement”), marking an important step towards modernising cross-border judicial cooperation.

The New Arrangement will come into effect upon completion of the relevant legislative procedures in Hong Kong.

Background

Since 1999, cross‑border service between Hong Kong and the Mainland has operated under a court‑to‑court entrustment mechanism, under which Hong Kong courts transmit judicial documents to their Mainland counterparts for onward service, and vice versa.

Over time, requests for mutual service of judicial documents have surged alongside the growth in cross-boundary interactions. Against this backdrop, the following challenges have become apparent:

Difficulty in locating respondents: In many cases, the intended recipient is no longer at the address provided or cannot be traced. Although Mainland courts may assist in attempting to locate updated addresses, such efforts are not always successful.
Limited flexibility and procedural complexity: Parties in Hong Kong have been restricted to effecting service in the Mainland through court transmission, with no alternative service methods formally available, resulting in an inflexible process. At the same time, the court entrustment mechanism involves multiple tiers of judicial administration, such that requests initiated by lower courts must be escalated through higher courts before service is effected, leading to delays and procedural complexity.

Expanded and Multi-Route Model of Service

Under the New Arrangement, service is no longer limited to court-to-court entrustment. The following modes of service are also recognised:

Postal service;
Electronic service, such as fax, e-mail and mobile communications (where the recipient has expressly consented or voluntarily provided an electronic address for service); and
Direct service through authorised persons, including legal representatives or notarisation institutions.

These modes may be used in parallel. Service may be regarded as effective based on the earliest successful method, which significantly enhances efficiency.

It should be noted that judicial documents to be served in the Mainland must be in the Chinese language. Where the documents are not in Chinese, a Chinese translation must be provided.

Where these methods prove unsuccessful, service may be effected by public announcement. In such cases:

The announcement must be published in media outlets with adequate circulation and influence in both the Mainland and Hong Kong; and
Service is deemed effective upon the expiry of 60 days from the date of the announcement.

Proof of Service

Proof that a document has been received may take various forms, including:

A certificate or proof of service issued by the court responsible for effecting service;
Signature by the recipient on the relevant service documents; and
Electronic system‑generated records evidencing receipt.

Importantly, service may also be deemed effective where the recipient has referred to the served judicial documents before the adjudicating court or has acted in accordance with those contents.

Relevance to Divorce Proceedings in Hong Kong involving parties in the Mainland

The New Arrangement is expected to have practical significance in divorce proceedings involving the Mainland.

Whilst it is not necessary to seek prior leave from the Hong Kong courts to serve divorce petitions and other documents in matrimonial proceedings out of jurisdiction, Order 11 of the Rules of the High Court must be complied with. Proceedings may be delayed if the petition or other documents cannot be properly brought to the attention of the respondent or other interested third parties in the Mainland.

The New Arrangement is therefore expected to facilitate the cross-border service of divorce petitions between Hong Kong and the Mainland, enhancing both efficiency and procedural flexibility, particularly in cases involving non‑cooperation or uncertainty as to the whereabouts of the respondent or other interested third parties.

Please contact our Partners, Wendy Lam and Calvin Lo, for any enquiries or further information.

This article is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

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