Key facts
- China's securities regulator stated that its crackdown on illegal cross-border investments will not result in forced liquidation of offshore assets.
- The China Securities Regulatory Commission (CSRC) assured that existing offshore accounts will remain operational.
- The campaign aims to "purify" capital markets, protect investors, and curb illegal capital outflows.
- Brokers must cease opening new accounts or accepting new funds for onshore clients by mid-June.
- Illicit cross-border services on the mainland will be terminated within two years.
China's securities regulator has clarified that its recent crackdown on "illegal" cross-border investments will not result in the forced closure of mainlanders' offshore accounts or the liquidation of their assets. The statement from the China Securities Regulatory Commission (CSRC) aims to alleviate concerns among investors holding approximately $54 billion in offshore accounts, following Beijing's unexpected move last month against "illegal" cross-border securities trading.
The CSRC emphasized that the safety of investors' assets will remain unaffected by the rectification campaign. Existing accounts will not be forcibly closed, and assets within them will not be subject to mandatory cleanup. Onshore Chinese investors will be permitted to sell assets and withdraw funds from these accounts. However, brokers providing illicit services on the mainland, including through websites and trading software, will have until mid-June to stop opening new accounts, adding positions, or accepting fresh funds, with a full termination of such services expected within two years.
Companies like Tiger, Futu, and Longbridge have already informed their onshore Chinese clients about these upcoming restrictions, while assuring that offshore services will continue. The CSRC reiterated that the policy's intent is to "purify" China's capital markets, safeguard investors, and combat illegal capital outflows. The regulator stated that no country would tolerate illegal activities within its borders, citing serious disruption to market order, increased financial risks, and harm to investors as reasons for the stringent measures. Responding to a query about whether the tightening of capital controls aims to redirect funds into domestic markets, the CSRC noted that Chinese assets are "appealing" and welcomed both domestic and international participation.