Philip FONG

Huatai Financial Holdings (Hong Kong) has informed existing mainland clients that, from October 30, 2026, Beijing time, services for opening or adding positions and transferring funds from the mainland will be suspended for investors in mainland China. Mr Chan, an investor in Dalian, received the notice on October 12. He had previously received similar emails from four or five Hong Kong brokers, according to Economic Observer.

The restrictions apply only to buying and funding. Existing holdings can still be sold or closed out as usual, account enquiries remain available and funds can still be transferred out. Several brokers use login IP addresses as the criterion: clients logging in with a mainland IP are subject to the restrictions, while those logging in from overseas, or who already hold Hong Kong or other jurisdictions' identity documents, are said by broker customer service staff to be exempt. Guotai Junan International (1788.HK) introduced the arrangement on September 26.

At least 10 mainland-backed institutions in Hong Kong follow suit

Futu, Tiger Brokers and Longbridge Securities were named by the China Securities Regulatory Commission on May 22 and placed under investigation in accordance with the law. The three companies made similar adjustments from June 12, followed by Valetudo Securities and Eddid Securities on June 15.

Mainland-backed brokers began joining the move from September. Guodu Hong Kong implemented the measures on September 1, followed by China Industrial Securities International (6058.HK) on September 7, Guotai Junan International on September 26, Soochow Securities International on September 30 and Shenwan Hongyuan Securities (Hong Kong) on October 1. Oriental Financial Holdings scheduled implementation for October. According to incomplete statistics from Jiemian, Guosen Securities (Hong Kong), China Securities International and CITIC Futures International have also issued notices.

Only five months into the clean-up period

The latest action stems from the Implementation Plan for the Comprehensive Crackdown on Illegal Cross-Border Securities, Futures and Fund Business Activities, jointly issued by eight mainland authorities including the CSRC on May 22. The plan sets a two-year concentrated clean-up period ending in May 2028. During this period, overseas institutions must not provide existing investors in the mainland with services including securities purchases and fund transfers into accounts. Only one-way sales and transfers of funds out of accounts are permitted. After the clean-up period, websites, trading software and supporting services targeting the mainland must be shut down in full.

In other words, the tightening measures being implemented by brokers are actions taken at the early stage of the clean-up, rather than a final closure at the end of the period. The CSRC said the campaign targets illegal cross-border operations by overseas institutions. Accounts already opened by investors will not be compulsorily cancelled, and the funds and assets in those accounts will not be forcibly cleared.

Hong Kong's regulator also took action on the same day. The Securities and Futures Commission issued a circular to licensed corporations, saying a review of the account-opening procedures of 12 securities brokerages had found that some institutions had accepted suspicious or forged documents. The circular requires licensed corporations to take additional measures when opening and managing accounts for mainland investors, including closing accounts opened with suspicious or forged documents, closing zero-balance dormant accounts, and obtaining a written declaration of the source of funds for new accounts. The Hong Kong Monetary Authority issued a similar circular to banks. The SFC said in June that licensed firms could continue providing services to existing mainland clients, provided the services were not offered within mainland China.

Identity and address checks tightened

According to Economic Observer, some brokers require clients to use a Hong Kong permanent or non-permanent identity card, or a passport from another country, as proof of identity. Holders of Hong Kong work or study visas are no longer accepted. Proof of address must be a utility bill or statement from a licensed bank issued within the past three months, showing the client's name and full address. It must be a residential address; office and company registration addresses are not accepted. The newspaper also reported that some investors had previously submitted simplified proof of address when opening accounts, and in some cases had repeatedly used the same document for an extended period. Brokers have now strengthened their anti-fraud verification systems.

Clients who fail to meet the requirements can have the original documents witnessed by a practising accountant, lawyer, notary or chartered company secretary, or visit a broker's office in person. An investor in Shenzhen who already holds a Hong Kong permanent identity card told the newspaper that her account had still not been restored a week after she submitted new documents through a mobile app. The broker subsequently told her to provide original documents witnessed by a qualified third party or attend the company's office in person for verification.

Zero-balance dormant accounts face time-limited clearance process

The HKMA's circular to banks stipulates that for "zero-balance dormant investment accounts" with no balance as at May 22, 2026 and no customer-initiated transactions in the preceding 12 months, institutions must identify the accounts within three months, contact the clients to reconfirm their know-your-customer information, and obtain written declarations and details of designated bank accounts. If the process is not completed within six months, the accounts will also face closure. Institutions are not required to close a client's zero-balance dormant account if the client has at least one other account with the same institution that has a non-zero balance or is not dormant. The SFC has also required licensed corporations to close zero-balance dormant accounts, with the detailed arrangements set out in Appendix B of its circular.

For accounts opened using suspicious or forged documents, the HKMA requires banks to review account-opening records dating back to January 2023 and close the accounts within six months after completing the verification.

Where the money can go: Stock Connect is not the only route

Legal channels for overseas investment cited by mainland authorities and market participants include Stock Connect, the Qualified Domestic Institutional Investor scheme, or QDII, and the Cross-boundary Wealth Management Connect.

For Stock Connect, individual investors generally need average assets of at least 500,000 yuan over the 20 trading days before applying and must pass a knowledge assessment. In terms of scale, Hang Seng Indexes data showed that the average daily turnover of southbound Stock Connect trades in the first eight months of 2025 was HK$60.8 billion, accounting for 24.5 per cent of overall market turnover.

For QDII, data from the State Administration of Foreign Exchange showed that the cumulative approved quota stood at US$183.009 billion as at August 31. By September, however, several popular QDII funds had suspended large subscription applications. Citing a late-May estimate by CITIC Securities, Observer quoted the value of existing mainland client assets affected by the latest campaign at about HK$200 billion to HK$250 billion. This is an estimate of existing assets, not a forecast of funds expected to flow into Stock Connect.

What to watch next

First, the progress in identifying and clearing zero-balance dormant accounts, with attention to the three-month identification period and six-month completion deadline set by the HKMA.

Second, whether more mainland-backed and foreign brokers will follow. The industry expects more institutions to tighten their measures, but Chan Chi-wah, chairman of the Hong Kong Securities and Investment Institute, previously urged the sector not to overinterpret the move or set internal compliance thresholds higher than required by law.

Third, QDII quotas and subscription restrictions, as well as changes in turnover as Stock Connect absorbs funds.

Fourth, whether regulators will issue supplementary rules during the clean-up period. The period ends in May 2028, when overseas institutions must fully shut down services targeting the mainland.