China has banned local brokerages and their units in other countries from opening accounts for new clients wanting to trade offshore.
The move, undertaken for the first time, seeks to restrict capital outflows and bolster the yuan – at a time when faltering growth has spurred investment abroad and weakened the currency.
New investments by existing mainland clients are also to be “strictly monitored” to prevent investors bypassing China’s foreign exchange controls, according to an official document and confirmed by four sources.
The China Securities Regulatory Commission (CSRC) told brokerages to stop offering securities trading from offshore accounts such as Hong Kong to new mainland investors, according to a notice on September 28 notice issued by its Shanghai unit. The notice has not been previously reported.
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It was not clear when the new directive was effective, but the sources said they believed the regulator wanted it to take effect immediately.
An end-October deadline was set for the removal of apps and websites soliciting mainland clients, the notice also said.
The sources declined to be named as they were not authorised to speak to the media. The CSRC did not immediately respond to a request for comment.
The ban on offshore investments via domestic brokers comes after two online brokerages – Futu Holdings and UP Fintech Holding – announced in May the removal of their apps in China amid Beijing’s sharpened focus on data security and capital outflows.
- Reuters with additional editing by Jim Pollard
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