Recently, with the approval of the State Council, the China Securities Regulatory Commission, together with eight departments including the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the State Administration for Financial Regulation, the Cyberspace Administration of China, and the State Administration of Foreign Exchange, officially issued the "Implementation Plan for Comprehensive Rectification of Illegal Cross border Securities and Futures Fund Operation Activities".

This is a comprehensive and long-term special rectification campaign targeting unlicensed cross-border business operations and illegal cross-border securities and futures trading by overseas institutions in China. The plan specifies a two-year centralized rectification period, comprehensively banning illegal cross-border financial activities, clearing existing illegal accounts and assets, while clarifying that investor property safety will not be affected by the rectification, and guiding the market to return to compliant cross-border investment channels.

1、 Background of Rectification: The chaos of illegal cross-border transactions has long disrupted financial order

In recent years, a large number of overseas securities, futures, and fund institutions have relied on domestic cooperative entities, online channels, apps, and websites to publicly solicit customers and open up overseas stock and derivative account opening, trading, and settlement services to domestic users without obtaining domestic regulatory approval.

Such unlicensed cross-border business activities not only bypass the domestic financial regulatory system and disrupt the order of the capital market, but also pose risks such as fraud, liquidation, capital outflow, and privacy leakage due to the lack of compliance supervision, dispute resolution, and investor protection mechanisms, seriously infringing on the rights and interests of ordinary investors.

As early as December 2022, the China Securities Regulatory Commission initiated a phase of rectification, suspending overseas institutions from adding domestic accounts and curbing disguised illegal business activities. On this basis, the eight department plan has been upgraded to full chain governance, multi department linkage, cross-border collaborative supervision, and long-term mechanism construction, covering all aspects of marketing, account opening, trading, instruction processing, fund transfer, network dissemination, etc. The rectification efforts and coverage have been comprehensively upgraded.

2、 Overall rectification strategy: Two year special campaign to achieve "banning increment and clearing stock"

This rectification has established four core principles: strict crackdown in accordance with the law, collaboration among multiple departments, stability and precision, and addressing both the symptoms and root causes. Through a two-year concentrated special governance, we will thoroughly eliminate the illegal cross-border securities and futures fund operation ecology.

The overall goal is clear and definite: resolutely crack down on all types of illegal incremental businesses, gradually reduce the size of existing illegal accounts and assets, and ultimately achieve the complete eradication of illegal cross-border businesses. While cracking down on violations, we will ensure the safety of investors' property to the maximum extent possible and smoothly complete market clearing.

3、 Clarify the three major targets of rectification: institutions, intermediaries, and full coverage of online accounts

This rectification is no longer limited to overseas trading platforms, but aims to achieve full containment of all entities, with all three types of entities included in the scope of regulatory crackdown:

Firstly, overseas institutions engaged in illegal cross-border business activities. Overseas platforms and institutions that provide securities, futures, and fund trading services to domestic users without domestic qualifications.

Secondly, the entities and intermediaries that assist in illegal business operations within the country. Domestic intermediaries, teams, and individuals who attract traffic, cooperate in operations, attract customers, guide account opening, and profit from overseas institutions.

Thirdly, the main body of online dissemination and traffic attraction. Websites that illegally publish overseas investment marketing content, account opening tutorials, trading strategies, and traffic promotion APP、 Self media accounts, etc.

4、 Comprehensive delineation of business red lines: Any unlicensed operation in any link is illegal

According to the Securities Law and the Futures and Derivatives Law, as long as overseas institutions and domestic partners do not obtain domestic business qualifications, participating in any link of marketing solicitation, account opening registration, trading instruction processing, and fund transfer in China constitutes illegal securities business activities and is fully included in the scope of prohibition.

At the same time, the rectification will simultaneously cover related derivative violations, including violations of foreign exchange management, anti money laundering, network security, personal information protection and other related illegal and irregular behaviors, achieving a "one-time rectification and comprehensive correction".

5、 Completely prohibit illegal business activities: marketing, account opening, trading, and services will be completely suspended

The plan specifies multiple rigid prohibitions to completely cut off the illegal cross-border transaction chain:

1. All domestic marketing and traffic diversion activities are prohibited. It is strictly prohibited for overseas institutions to operate websites within the country APP、 Push investment information, carry out rebate promotions, and promote overseas stocks and derivatives; Internet platforms and We Media are strictly prohibited from publishing drainage, account opening and promotion content.

2. Illegal account opening and trading services are prohibited. It is strictly prohibited for overseas institutions to receive domestic account opening applications and transaction instructions through cross-border servers and software, and any entity is strictly prohibited from assisting or guiding domestic users to open accounts and conduct transactions in violation of regulations.

3. Prohibit domestic entities from illegally assisting. It is prohibited for domestic institutions, teams, and individuals to provide supporting services such as technology development, operation, customer service, and fund docking for illegal overseas platforms.

6、 Detailed rules for the two-year transition period: Only going out without moving in, smoothly clearing existing assets

To avoid market fluctuations and protect investor rights, a two-year centralized rectification transition period is set up for this rectification, implementing differentiated arrangements of "stable exit and asset protection":

During the transition period, implement the policy of 'only leaving without entering'. Overseas institutions are not allowed to provide services such as opening new positions, adding new purchases, and transferring funds to existing domestic investors. Only users are allowed to sell their positions and transfer funds.

2. Complete shutdown of services at the end of the transition period. After the two-year rectification period, overseas institutions must completely shut down domestic websites, trading software, and supporting servers, and completely terminate all trading services for domestic users.

Regulatory authorities emphasize that this rectification will not affect the safety of investors' own property, and require overseas institutions to proactively connect with users, properly dispose of account assets, and orderly complete the clearance.

7、 Multi departmental joint law enforcement: comprehensively blocking illegal cross-border financial links

This rectification is a coordinated law enforcement by eight departments, with clear division of labor and closed-loop supervision. The China Securities Regulatory Commission takes the lead in coordinating the rectification and establishing a list of illegal institutions; The State Administration for Financial Regulation, the People's Bank of China, and the State Administration of Foreign Exchange have blocked funding channels from the perspectives of bank settlement, anti money laundering, and foreign exchange compliance; Cyberspace Administration and Ministry of Industry and Information Technology clean up illegal accounts, websites APP； Market supervision departments rectify illegal advertisements and business entities; The Ministry of Public Security is cracking down on illegal economic activities; Local governments implement the responsibility of territorial clearance.

The entire mechanism has achieved comprehensive blocking of the network, fund, institution, information, and judicial ends, completely cutting off the soil for the survival of illegal cross-border securities and futures.

8、 Investor Core Reminder: Illegal channel trading is not protected by law

Regulatory clear reminder: Investors participating in cross-border transactions through unlicensed overseas platforms will not be able to obtain domestic legal remedies and regulatory protection in the event of platform absconding, malicious liquidation, fund freezing, or disputes. All risks will be borne by the investors themselves.

In the future, domestic users can only participate in overseas investments through the Hong Kong Stock Connect QDII、 Official compliance channels such as Cross border Wealth Management Connect legally safeguard the safety of one's own assets and investment rights.

Conclusion

The joint rectification by eight departments marks the complete end of the era of disorderly growth of illegal cross-border securities and futures in China. Through a two-year transition period to smoothly clear inventory, block incremental growth throughout the entire chain, and establish a long-term regulatory mechanism, the regulatory authorities will thoroughly regulate cross-border investment order, guide market funds, investor behavior, and industry development to fully return to compliance, and build a strong risk defense line for the stable operation of the capital market.