We are pleased to announce that our Partner, Kenneth Leung, has been named in the Asian Legal Business (ALB) Hong Kong Rising Stars 2026, recognising outstanding young legal practitioners in Hong Kong.

The annual ALB Hong Kong Rising Stars list recognises the achievements of the next generation of legal talent under the age of 40. Candidates are considered on the strength and complexity of their work, client feedback and their contribution to the wider legal profession.

Kenneth is a Partner in our Litigation & Dispute Resolution and Regulatory Enforcement & Compliance practices. He has extensive experience in complex commercial disputes and regulatory matters, with a particular focus on advising and representing corporations and financial institutions in contentious regulatory investigations, enforcement proceedings and related advisory matters.

Kenneth’s inclusion in the ALB Hong Kong Rising Stars 2026 recognises his strong legal and commercial judgement, professionalism and commitment to client service, as well as his expertise in navigating complex disputes and regulatory matters.

View the full-list of the ALB HK Rising Stars 2026 here.

Please contact our Partner Kenneth Leung for any enquiries or further information.

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.

1. 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]

2. 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.

3. 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.

4. 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).