Three Firms Named and $331 Million Disclosed Across Two of Them
The China Securities Regulatory Commission and its local bureaus issued administrative penalty pre-notification letters on May 22, 2026, to three entities: Tiger Brokers (NZ) Limited, Futu Securities International (Hong Kong) Limited, and Longbridge Securities (Hong Kong) Limited, according to the CSRC. The regulator cited business conducted for mainland residents without domestic approval, in violation of China’s securities, fund and futures laws.
For Futu Holdings Limited (NASDAQ: FUTU), a Hong Kong-based online broker, the CSRC and its Shenzhen bureau proposed confiscation of about RMB470 million in gains and fines of about RMB1.38 billion, a combined RMB1.85 billion ($271 million), according to Futu, along with a RMB1.25 million personal fine on founder and chief executive Leaf Hua Li. For UP Fintech Holding Limited (NASDAQ: TIGR), the parent of the Tiger Brokers platform, the CSRC Beijing bureau imposed fines of about RMB308.1 million and confiscation of about RMB103.1 million, a combined RMB411.2 million ($59.7 million), according to the company’s Form 6-K, with a RMB1.25 million personal fine on chairman and chief executive Wu Tianhua.
Longbridge Securities (Hong Kong) Limited, a privately held broker that states it has raised more than $150 million from investors including PhillipCapital, was named on the same basis. The CSRC did not publish a monetary figure for Longbridge, so it is not included in the comparison above. Futu’s penalty is a proposal subject to a hearing and further proceedings, and the final figure may differ from the amount the company provisioned; UP Fintech described its penalty as accepted, and stated it is cooperating with regulators and implementing required rectification measures.
Reported Profit Fell 61% as Revenue Rose 24.7%
Futu reported first-quarter revenue of HK$5.86 billion ($746.9 million), up 24.7% from a year earlier, with total trading volume reaching HK$4.15 trillion, according to the company. Reported net income fell 61.2% to HK$831 million ($106 million). Futu booked the penalty in full as a subsequent event and stated that, excluding the charge, net income would have been about HK$2.92 billion. Operating income, which excludes the charge, rose 31.5% to HK$3.53 billion, and the operating margin widened to 60.3% from 57.2%.
“This amount does not impact our business fundamentals or financial stability,” Arthur Yu Chen, chief financial officer, Futu Holdings.
UP Fintech reported revenue of $154.9 million, up 26.3%, and a net loss of $26.9 million, against a $30.4 million profit a year earlier, according to the company. The penalty sat in the others, net line, which moved to a $64.1 million expense and brought the pretax result to a $16.5 million loss. Commissions rose 15.3% to $67.2 million and interest income rose 19.8% to $64.5 million.
Beneath the reported loss and the profit cut, the operating businesses grew. Across Futu’s reported metrics, revenue rose 24.7%, trading volume rose 29.1%, funded accounts rose 34.3%, and client assets rose 47.2% year over year.
Shares Fell About 26% on May 22 Then Rose by May 26
Futu’s US-listed shares closed at $89.76 on May 22, down 27.5%, and UP Fintech closed down 25.3%, according to market data. Trading was closed on May 25 for the Memorial Day holiday. When it resumed on May 26, Futu rose about 20% to $107.70 and UP Fintech rose about 14.9%. Futu traded near $103 in early June, about 49% below its 52-week high of $202.53 set on November 3, 2025.
Analyst responses divided along the two names. JPMorgan lowered Futu to a neutral rating and cut its price target to $87 from $300, then raised it to $100 on May 26, according to published research. Goldman Sachs lowered Futu to neutral with a $102 target and maintained a sell rating on UP Fintech, while Morgan Stanley kept an overweight rating on Futu with a $225 target. On June 2, 2026, Futu stated that S&P Global Ratings reaffirmed its long-term issuer credit rating at BBB- with a stable outlook, citing the company’s Hong Kong market position and geographic diversification.
Mainland Clients Are 13% of Futu Accounts and About 20% of Revenue
Futu and UP Fintech are incorporated outside mainland China and hold licenses in Hong Kong, the United States, Singapore and other markets. Neither holds a mainland Chinese brokerage license, which Beijing has not issued for cross-border online brokerage. On its first-quarter earnings call, Futu stated that mainland clients accounted for about 13% of funded accounts, about 17% of client assets, and about 20% of revenue. UP Fintech has stated that mainland retail client assets were about 10% of its total at the end of 2025.
Both firms reported account growth from markets outside the mainland. Futu funded accounts rose 34.3% to 3.59 million, and UP Fintech added 28,900 funded accounts in the quarter, most from Singapore and Hong Kong, bringing its total to 1.28 million, according to the companies.
FM Intelligence calculates Futu’s mainland-related revenue at approximately HK$4.7 billion on an annualized basis, applying the roughly 20% mainland revenue share Futu disclosed for the quarter to annualized first-quarter revenue of about HK$23.4 billion. Because the sell-and-withdraw rule removes new mainland inflows and trading, this revenue declines over the two-year transition. FM Intelligence models three paths for the share of that annualized figure retained in year one and year two: a base case (50% probability) of about 50% then 20%; a bull case (20% probability) of about 65% then 35%, if existing clients trade actively while winding down; and a bear case (30% probability) of about 35% then 10%, under faster liquidation. These are FM Intelligence estimates derived from a single disclosed exposure figure and the published wind-down mechanics, not from a mainland-specific revenue series, which Futu does not publish, and will be revised as quarterly data becomes available.
The mainland share of revenue, at about 20%, exceeds the 13% share of accounts, which indicates higher revenue per mainland account than the firm-wide average and is the reason the revenue at risk runs ahead of the account count.
An Eight-Agency Plan Sets a Two-Year Deadline to Close the Channel
The penalties accompany a broader campaign. With State Council approval, eight government departments issued an implementation plan on May 9, 2026, to end illegal cross-border securities, futures and fund business within a two-year rectification period, according to the CSRC. The departments include the CSRC, the People’s Bank of China, the Ministry of Public Security, and the State Administration of Foreign Exchange. During the transition, existing mainland clients may only sell and withdraw, and at the end overseas institutions must close mainland-facing websites, applications and servers. The CSRC stated that channels such as Stock Connect and the Qualified Domestic Institutional Investor program are unaffected.
The action follows warnings that date to 2021. In December 2022, the CSRC declared the activity illegal and barred the brokers from soliciting mainland clients or opening new mainland accounts, while allowing existing clients to continue trading. In May 2023, the Futubull and Tiger applications were removed from mainland app stores, and existing clients continued trading until the May 2026 penalties.
The scrutiny extended to Hong Kong on the same day. The Hong Kong Securities and Futures Commission, following a review of 12 licensed brokers, required firms to verify client documentation and review accounts opened with questionable materials, and the Hong Kong Monetary Authority issued a parallel circular to banks, according to the SFC. The CSRC stated that the unlicensed cross-border activity disrupted market order and warranted enforcement. The plan spans agencies responsible for foreign-exchange control, criminal enforcement and network regulation, which places the action within China’s wider management of capital outflows; Bloomberg calculated that about $1.04 trillion in outflows left China in 2025.
Several factors qualify the view that the penalties represent a one-time event. Futu’s penalty is a proposal that could change in final form. The two-year wind-down could move faster than an orderly runoff if mainland clients liquidate early. The mainland share of revenue, at about 20%, is higher than the 13% share of accounts. Securities class-action investigations have been announced against both companies in the United States. And the eight-agency plan applies to all unlicensed cross-border operators, which leaves open the prospect of further named firms during the rectification window.
FM Intelligence figures for Futu and UP Fintech are drawn from the companies’ earnings releases and filings for the quarter ended March 31, 2026, and from CSRC statements dated May 22, 2026. Penalty conversions to US dollars follow the figures reported by each company. The mainland revenue scenario is an FM Intelligence estimate based on the single mainland revenue-share figure Futu disclosed for the quarter, applied to annualized first-quarter revenue; it does not rest on a mainland-specific revenue time series, which the company does not publish, and will be revised as further data becomes available. All projections are FM Intelligence estimates and should not be treated as forecasts.