China's securities regulator has set a two-year deadline to close the cross-border channel that let mainland investors trade global stocks through offshore brokers, and the bill is already showing up in earnings.
The China Securities Regulatory Commission (SRC) named three firms on May 22 and disclosed about $331 million in fines and confiscated income across two of them. A new FM Intelligence analysis breaks down who pays, how much revenue is at risk and how fast it could disappear.
Futu Holdings disclosed a proposed penalty of about RMB1.85 billion, or roughly $271 million, while UP Fintech, the parent of Tiger Brokers, reported RMB411.2 million, about $59.7 million.
The regulator did not attach a figure to the third firm, Longbridge Securities. FinanceMagnates.com first reported the Futu penalty when the company disclosed it.
The Penalties Hit Reported Profit but Not the Underlying Business
The charges cut Futu's reported first-quarter net income 61.2% to HK$831 million, and pushed UP Fintech to a $26.9 million net loss against a $30.4 million profit a year earlier. Both firms booked the penalties as one-time items.
Strip out the charge and the operating picture looks different. Futu's revenue rose 24.7%, funded accounts climbed 34.3%, and client assets grew 47.2% year over year. UP Fintech 's revenue rose 26.3%.
"This amount does not impact our business fundamentals or financial stability," said Arthur Yu Chen, chief financial officer of Futu Holdings.
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Investors took a darker view at first. Futu shares fell 27.5% on the day, then rebounded about 20% three sessions later, helped by an S&P Global Ratings decision to reaffirm the company's investment-grade rating.
How Much Mainland Revenue Is Actually at Stake
This is where the FM Intelligence modeling comes in. Futu has said mainland clients make up about 13% of funded accounts but roughly 20% of revenue, a gap that signals each mainland account is worth more than the firm-wide average.
Because the wind-down lets existing clients only sell and withdraw, that revenue erodes over two years rather than vanishing at once.
FM Intelligence models three paths for how much survives, with a base case that sees the mainland contribution roughly halve in the first year and shrink further in the second.
The action is not isolated. The CSRC first declared the activity illegal back in 2022, when it ordered Futu and UP Fintech to stop taking new mainland clients, and the latest penalties sit inside an eight-agency plan approved by the State Council.
The full FM Intelligence analysis lays out the scenario ranges, the annualized revenue exposure and why the regulator's two-year deadline may run faster than an orderly runoff.
