Welcome to CFTE’s Fintech Shot for October 21st, 2021. Here’s some knowledge for your brain about what happened to Chinese online brokers Futu and Up FinTech:
What is it about?
According to the People’s Daily, China’s new personal data law can have serious implications on US-listed brokerages Futu Holding and UP Fintech Holding. The Personal Information Protection Law (PIPL), which is taking effect on 1st November, states that companies need individual consent to obtain personal information, as well as ask for the review from Beijing before going public overseas if they have more than 1 million users. After these news, Futu’s NASDAQ shares fell by 14%, whilst UP Fintech slumped 21%.
What are the US-listed Chinese online brokerages Futu Holding and UP Fintech Holding?
Futu and UP Fintech help Chinese individuals invest in overseas stock markets. This new law poses a particular problem for these companies as they don’t have brokerage licenses in mainland China. Rather, currently, Chinese citizens are able to open accounts online by submitting their financial information.
What are the implications? Why is it interesting?
Futu and UP Fintech are not the only companies affected by these regulations, online brokers such as Snowball Securities are facing compliance risk as well. China has been tightening its regulations as it has already launched a couple of crackdowns targeting the financial market. The PIPL is just one of its next moves.
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