China cracks down on illegal cross-border securities trading

[BEIJING] China is launching a sweeping campaign against illicit cross-border securities, futures and fund trading, in an unprecedented crackdown that aims to stamp out such activities within two years.

The plan, jointly issued on Friday (May 22) by the China Securities Regulatory Commission and seven other government bodies with State Council approval, is set to dismantle unauthorised offshore investment services that target mainland investors. 

Officials said the measures are designed to clean up the capital market environment and steer investors toward regulated channels for overseas investment. An estimated US$1.04 trillion of so-called hot money flowed out of the country in 2025, according to an index compiled by Bloomberg Intelligence – the biggest annual outflow since data began in 2006.

The move represents a major escalation of China’s tough stance on capital flows out of the country, and comes around three years after local retail traders were cut off from accessing the apps of popular brokerages Futu Holdings and Up Fintech Holding. 

Under the new initiative, overseas institutions will be banned from marketing in China related to securities, futures and fund products. They will also be prohibited from offering account-opening services, executing trades or facilitating fund transfers for domestic clients.

The crackdown extends beyond foreign firms. Domestic entities that assist such operations – including intermediaries that solicit investors or companies providing website, trading software or customer support – will also be subject to enforcement action. Internet platforms and social media accounts publishing illegal promotional content are included.

SEE ALSO

Global funds pile back into Chinese stocks in April

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

In addition to securities laws, violations involving foreign exchange controls, anti-money laundering rules, cybersecurity requirements and personal data protection will also be inspected.

Banks will face closer scrutiny as well. Institutions providing accounts for cross-border investment will be required to strengthen compliance checks on outbound foreign exchange transactions, as regulators move to curb illicit capital outflows, including those routed through underground banking networks. BLOOMBERG