China Bans Mainland Investors from Opening Offshore Trading Accounts 🇨🇳❌

China has issued a notice prohibiting domestic brokerages and their overseas units from accepting new mainland clients for offshore trading, while also tightening monitoring of new investments by existing mainland clients to prevent potential bypassing of foreign exchange controls. This move is prompted by concerns over capital outflows as China’s economy grapples with slowing growth and increased overseas investments impacting the yuan. The directive, issued by the China Securities Regulatory Commission (CSRC) through its Shanghai unit on September 28, effectively puts an immediate halt to securities trading from offshore accounts like those in Hong Kong to new mainland investors. It also sets an end-of-October deadline for the removal of apps and websites soliciting mainland clients. The move will impact major brokerages, including state-owned firms like Citic Securities, CICC, and Haitong Securities, which rely on offshore trading services in Hong Kong for a significant portion of their revenue. This action follows the removal of apps by two online brokerages earlier this year in response to Beijing’s focus on data security and capital outflows. However, Chinese individuals can still invest in offshore securities via channels like the Stock Connect with Hong Kong and qualified domestic institutional investor and qualified domestic limited partnership programs.