SHANGHAI, Oct. 14 (Reuters) – Chinese US-listed online brokerage firms Futu Holding (FUTU.O) and UP Fintech Holding face regulatory risks as China’s new personal data protection law enters effective Nov. 1, the official People’s Daily said in an analysis on its website.
Such brokerage firms, which help mainland Chinese individuals invest in foreign stock markets like the United States and Hong Kong, could violate data privacy rules and also pose compliance risks, the article said. .
China has launched a wave of crackdowns targeting industries ranging from tech to cryptocurrency to real estate. The People’s Daily article could put Chinese online brokers in the regulatory sights.
China will implement the Personal Information Protection Law from November 1, supplementing the Data Security Law by regulating cyberspace and protecting national security.
The new rules will regulate the export of personal data, posing a challenge to online brokers who provide cross-border business services to citizens of mainland China, the People’s Daily said.
Brokerage houses such as Futu and UP Fintech do not have brokerage licenses on the mainland, but Chinese citizens can open accounts online after submitting personal information relating to identity cards, bank cards and of tax records, the article said, adding: “After personal information is collected, where does it go?”
Online brokers, which also include Snowball Securities, also face trade compliance risks, according to the article.
Currently, Chinese investors can invest in foreign stock markets through Connect cross-border programs and through Qualified Domestic Institutional Investors (QDII).
Other than these two channels, China’s securities regulator has not allowed any institution to provide cross-border business services to domestic investors, the People’s Daily said.
Reporting by Samuel Shen and Emily Chow Editing by Toby Chopra and Mark Potter
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