FUTU, TIGR Stocks Are Crashing Today: Here’s What Spooked Investors

• Chinese authorities said the firms would face restrictions as Beijing intensifies oversight of cross-border investing.
• There has also been a two-year grace period for these entities to wrap up their current illegal operations, according to the report.
• During this timeframe, investors will reportedly be allowed to sell their existing stake and withdraw funds; no new investments will be allowed.
  
   

The U.S.-listed shares of Futu Holdings (FUTU) and UP Fintech Holding tumbled over 33% and 35%, respectively, premarket on Friday after China's securities regulator reportedly announced it has launched a crackdown on international activities that illegally channel domestic funds into overseas securities, futures, and fund products.

The move has revived fears around Beijing’s long-running scrutiny of cross-border capital flows and the future growth prospects of Chinese online brokerages. 

Why FUTU, TIGR Stocks Are Tumbling?

The Chinese regulator has said it would take action against brokerage firms Futu, Tiger (owned by UP Fintech Holdings), and Longbridge for operating in mainland China without an onshore license, according to a Reuters report.

The Chinese regulatory agency also stated that unauthorized securities operations breach domestic law, undermine market stability, and harm investors.

What Does China’s Crackdown Mean?

The crackdown has targeted overseas companies and their regional partners for operating in China without permission. There has also been a two-year grace period for these entities to wrap up their current illegal operations. During this timeframe, investors will be allowed to sell their existing stake and withdraw funds with no new investments allowed, the report stated.

These actions were a part of a broader effort to establish a long-term mechanism to safeguard financial market integrity and protect investor rights, regulators said.

According to the report, eight government agencies, including the China ⁠Securities ​Regulatory Commission, China's central ​bank, and the forex regulator, started the campaign.

The Chinese regulators in late 2022 stated that Futu Holding and UP Fintech Holding were illegally conducting securities businesses and would be banned from opening new accounts from mainland Chinese investors, according to a Reuters report. 

What Do FUTU And TIGR Do?

Futu Holdings (FUTU) operates a digital brokerage and wealth management product built around its Futubull and Moomoo platforms. The Hong Kong-based firm, founded in 2007, lets users trade securities and derivatives on margin, while its Money Plus arm opens the door to mutual funds, bonds, structured products, and other wealth management tools. 

UP Fintech, the parent of Tiger Brokers, provides online brokerage services to  Singapore, the U.S., and other international markets. Its Tiger Trade brokerage platform offers stock, options, and warrant trading through app and web, alongside margin financing and securities lending. The company is headquartered in Singapore and has been operating since 2014. 

What Does Retail Think Of FUTU And TIGR?

On Stocktwits, retail sentiment for FUTU has improved to ‘extremely bullish’ from ‘neutral’ while message volumes increased to ‘extremely high’ from ‘normal’ over the past 24 hours.

For TIGR stock, the retail sentiment has also improved to ‘extremely bullish’ from ‘bullish’ while message volumes increased to ‘extremely high’ from ‘normal’ over the same period.

One user on Stocktwits said FUTU has many international customers but it's more critical for TIGR.

Shares of Futu Holdings have dropped over 30% while UP Fintech Holdings shares have dropped more than 30% so far this year.

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