Futu (FUTU), UP Fintech (TIGR) Block Mainland Deposits and Buy Orders

China's eight-agency rectification plan of 22 May 2026 judges a cross-border violation by where the business activity happens rather than by who the client is, and that has forced licensed offshore brokers to switch off mainland client access inside their own apps. On earnings calls between 2 June and 20 August 2026, UP Fintech (TIGR) explained the rule and the required shutdown of mainland-facing websites and software, Futu Holdings (FUTU) reported the first measured results after implementing the block, and Huize (HUIZ), asked about the same tightening, said its Hong Kong business was not affected [1][2][3].

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The rule turns on where the activity happens, and brokers enforce it themselves

Futu and UP Fintech are online brokers licensed in Hong Kong. Account opening, funding and trading in Hong Kong and US stocks all happen inside one mobile app, which mainland residents were able to download. On 22 May 2026 eight agencies issued the Implementation Plan for the Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities, which judges a violation by where the business activity takes place: no soliciting mainland investors and no new accounts, existing accounts restricted to sell transactions and fund withdrawals during a two-year rectification period, and mainland-facing websites and trading software shut down inside that window [4]. On 2 June UP Fintech said the rule targets the onshore operation of all industry players, and that brokers and banks cannot market cross-border investment services inside the mainland [2].

The party ordered to enforce it is the licensed broker itself. On 28 May Futu disclosed the size of what the rule governs: mainland funding accounts were about 13% of its funded accounts, related client assets about 17%, contributing roughly 20% of revenue [5]. Once location restrictions went live in the app, that cohort of existing clients was left with selling as its only direction, and it does not come back inside the two-year window. A channel with no onshore intermediary does not fall under the rule — a Hong Kong policy is signed in Hong Kong and has no mainland app to remove. Beijing reaches those channels with a different instrument: from August, enforced first in Beijing and Hangzhou, gains that mainland residents earn on overseas insurance policies are taxed at 20% as individual income [6].

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The first measurable results: client asset outflows and a higher cost to acquire clients

On 20 August Futu gave the first set of numbers since the block went live. Cumulative asset outflows were about a mid-single-digit percentage of total client assets, split roughly evenly between mainland and Hong Kong clients, with the mainland share concentrated in June and July and attrition moderating in August; management believes the bulk of the impact was already absorbed in the second quarter [1]. On the same call, blended customer acquisition cost rose sequentially to around HK$2,600, still inside the company's four-year guidance range of HK$2,500 to HK$3,000, with the increase attributed to lower net new funded accounts [1].

UP Fintech supplied the other side of the magnitude: at the end of the first quarter, mainland retail client assets were roughly 10% of its total client assets but contributed 20% to 25% of total net revenue [2]. Huize, asked by Citi on 20 August about mainland residents buying Hong Kong policies and about the related tax reporting, answered through its co-CFO that demand in July and August to date remained robust and that the report in question described regulation that has long existed in China [3].

The measured outflows and rising costs all appear at brokers with a mainland app to shut down. Hong Kong insurance distribution, asked the same question, had reported no operating impact as of 20 August.

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Same mainland clients, two different instruments

The control point moves from the client's identity to whether the chain contains an intermediary subject to mainland jurisdiction. For the brokers, the client entry point is closed by the broker itself, acquisition cost rises while net new funded accounts fall, and the governed revenue does not return during the rectification period. For Hong Kong channels with no onshore intermediary, the tax changes the after-tax return on holding an offshore policy rather than the ability to buy one. The follow-up metrics worth watching are whether Futu's net new funded accounts and acquisition cost recover, and whether asset outflows continue the moderation seen in August [1].

The tax leg is not yet priced into any company's reported numbers. AIA (01299.HK) reported Hong Kong new business value up 10% in the first half while annualised new premiums rose less than 1% [7]. Even where the access rule does not bind, volume in the Hong Kong channel is flat.

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Companies exposed to this change:

• East Money (300059.SZ): China's largest retail internet securities platform, whose A-share brokerage and QDII fund distribution (publicly offered funds through which mainland money can legally invest offshore) are the compliant destination for this money; the outflows Futu is measuring would in principle move toward onshore channels, though the research holds no disclosure from the company.
• Guotai Junan International (01788.HK): the Hong Kong subsidiary of a mainland securities house, running the same app-based retail brokerage and margin business, inside the onshore operation UP Fintech described; coverage holds no earnings call transcript for it, so its exposure is undisclosed rather than denied.

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Sources

[1] Drillr · Futu Holdings (FUTU) · 2026-08-20 · earnings call

"As for the cumulative asset outflows since the new regulations, the outflows were about mid-single-digit percentage of our total client assets. And we believe the bulk of the impact has already been absorbed in Q2. And the outflows came from both our mainland and Hong Kong client base. And the two are roughly about the same."

[2] Drillr · UP Fintech (TIGR) · 2026-06-02 · earnings call

[3] Drillr · Huize (HUIZ) · 2026-08-20 · earnings call

[4] BigGo Finance · Implementation Plan for the Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Business Activities · 2026-08-21 · web page · https://finance.biggo.com/news/1KuDU54BtCxy99G5KqSA

[5] Drillr · Futu Holdings (FUTU) · 2026-05-28 · earnings call

[6] AAStocks · China levies 20% individual income tax on gains from overseas insurance policies · 2026-08-05 · news · https://www.aastocks.com/tc/stocks/news/aafn-con/NOW.1536818/latest-news/AAFN

[7] AAStocks · AIA 2026 interim results · 2026-08-20 · news · https://www.aastocks.com/tc/stocks/news/aafn-con/IC4969960/latest-news/INFOCAST

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