What do you think
Source:Glen
On 22 May 2026, China ' s capital market received heavy regulatory weight: eight departments, including the CSRC, jointly issued the Operational Programme for the Integrated Management of Illegal Cross-Border Securities Futures Funds
On the same day, the CVM issued an administrative notice to the three Internet issuers, Futou, Tiger and Longbridge, with the intention of confiscating all the proceeds of the violations committed by the relevant subjects, both inside and outside the three institutions, and imposing severe penalties in accordance with the law。
After the news came to the ground, the pre-stock prices of the Freeway and Tiger securities fell sharply, once by over 40 per cent and 45 per cent, with the market evaporating hundreds of billions of dollars overnight and the entire market burst。
This regulatory action, known as the “cross-border coupons battle against corruption”, will put an end once and for all to the grey age of unlicensed market operations in the interior of the interior of the country and reshape the market pattern of cross-border investment by residents of the interior。
01
The core legal basis for this specific overhaul derives from the core principles of the Securities Act, which are clearly defined as “licensed, licensed and territorial management of securities”。
Our legal system clearly states that no offshore financial institution may carry out trading in securities without the approval of the CSRC, such as securities brokerage, marketing, brokering, transfer of funds, etc., and that the financial licence of an offshore jurisdiction does not have the effect of operating in the country。
THE CORE VIOLATION OF THE LAW IN INSTITUTIONS SUCH AS FUTTAO AND TIGERS IS THAT, WITHOUT THE APPROVAL OF THE CSRC AND WITHOUT OBTAINING BUSINESS PERMISSION FROM DOMESTIC SECURITIES BROKERS, FINANCING VOUCHERS, ETC., AND BEFORE BEING ORDERED TO STOP, THE ENTIRE CHAIN OF SERVICES, SUCH AS MARKETING, OPENING OF ACCOUNTS, TRADING INSTRUCTIONS, ETC., TO DOMESTIC INVESTORS, THROUGH THE RELEVANT DOMESTIC ENTITIES, APS AND WEB PLATFORMS, CONSTITUTES A TYPICAL “DRIVING WITHOUT LICENCE”。
This joint effort of the eight ministries was to completely close this oversight gap, which was subsequently rendered impossible by the grey operation of such a drill。
02
The orderly flow of cross-border capital is a core cornerstone of our macro-financial regulation, exchange-rate stability and the security of foreign reserves。
THE COUNTRY CURRENTLY HAS A PROGRESSIVE OPEN-DOOR SYSTEM FOR CAPITAL PROJECTS, WHICH RELIES ON COMPLIANCE CHANNELS SUCH AS QDII AND PORT EQUITY TO ACHIEVE AN ORDERLY FLOW OF CROSS-BORDER FUNDS THAT CAN BE MONITORED, REGULATED AND CONTROLLED BY WIND。
However, many people had previously used cross-border vouchers to sell shares and, in order to avoid the US$ 50,000-per-year remittance restrictions, to transfer the money through splits, private transfers, underground money houses, etc。
This creates a trillion-class, completely unsupervised financial tunnel that is completely detached from foreign exchange management and financial regulation。
Such uncontrolled capital flows not only weaken the effects of monetary policy and macroprudential regulation, but may also trigger concentrated capital outflows in the cycle of increased volatility in global capital markets and adjustment of the Federal Reserve ' s monetary policy, impacting on the exchange rate of the renminbi and the security of foreign exchange reserves and creating systemic financial risks。
This clean-up of illegal cross-border transactions through closed loops is also intended to reshape the system of control of cross-border capital flows and to safeguard the national financial security floor。
At the same time, cross-border illicit securities operations continue to be characterized by structural weaknesses in regulation and lack of access to rights。
Internal investors are involved in foreign voucher transactions, have no access to domestic legal protection, accounts freeze, misappropriation of funds, transaction disputes, platform failure Often, investors also have difficulty defending their rights through local regulatory and judicial channels。
Such illegal platforms also accumulate large amounts of information on the identity of users in the interior, records of transactions and information on financial transactions, the storage, transmission and use of data away from domestic data security regulations, and the risk of personal information leaking and data security failures remains high。
The core of this round of re-regulation is intended to build a cross-border investment risk line for ordinary investors from the source, to break through high-risk transactions and uninsured industry and to push cross-border investor protection into the rule of law and normative trajectory。
THE OPENING UP OF OUR CAPITAL PROJECTS TO THE OUTSIDE WORLD, ALONG THE LINES OF STEADY PROGRESS, AND ADHERENCE TO A MATURE, OPEN CODE, FORMAL INVESTMENT CHANNELS SUCH AS QDII, PORT EQUITY, ETC., ARE IMPORTANT PLAYERS IN MAINTAINING SMOOTH REGULATION OF FINANCIAL MARKETS。
It is also the desire of the regulators to channel funds to compliance channels through remediation, facilitating macro-regulation and risk management, while promoting improved compliance channels and gradually meeting the cross-border investment needs of ordinary investors。
03
The impact of regulation on these cross-border issuers is undoubtedly direct and significant。
The first is a blanket ban on business within its borders, which can only be sold and not bought by its stock customers, and the additional compliance pressure of cross-border regulatory collaboration, which has a significant impact on corporate business as a whole and on subsequent operations。
Secondly, it is also necessary to face the consequences of the confiscation of all the proceeds of the offence and the imposition of severe penalties in accordance with the law. It is estimated that the proceeds of the offences in the territories of the two organizations, the Rich and the Tigers alone, could amount to billions。
At present, there was a drop of more than 40 per cent and 45 per cent in front of the Freeway and Tiger Securities and the market value evaporated to over $10 billion, sufficient to reflect the strong intensity of the shock。
At present, it is estimated that there are a total of 900,000-1.2 million inland asset-stock users at Fongway, Tigers, Long Bridge and various small and medium-sized offshore issuers。
According to the latest disclosure in the first quarter of 2026, the share of customers with assets in the interior has dropped to 13 per cent, and the agency calculates that there are approximately 438,000 users of assets in the effective stock in the interior。
Tiger securities had 1.25 million asset customers globally at the end of 2025, and industry measured that the proportion of customers in its inland compliance external stock remained at 20-25 per cent, corresponding to 300,000-310,000 asset inventory users in the interior。
Long Bridge securities, as the core body of the industry ' s second tier, do not have publicly available financial data, and they estimate that there are approximately 100,000 to 150,000 asset-stock users in their interior。
ACCORDING TO THE SOYA KIT AI DATA, ADDING TO THE REST OF THE SMALL AND MEDIUM-SIZED OFFSHORE CROSS-BORDER ISSUER ' S SCATTERED INVENTORY OF USERS AND ASSETS, THERE ARE CURRENTLY A TOTAL OF 900,000-950,000-95 MILLION OUT-OF-INSTRUMENT USERS IN THE INTERIOR OF THE INDUSTRY, AND THE CORRESPONDING TOTAL CROSS-BORDER STOCK IS APPROXIMATELY $250-2,800 BILLION AND MAY BE MUCH MORE。
04
According to agency estimates, these non-compliant stocks of cross-border funds are highly concentrated, with the bulk of the funds distributed among the three main sectors of the new economy, namely, the United States share of technology, the medium-size unit and the Hong Kong share。
Now, the users will be forced to retire within two years, selling only the holding stock and unable to continue buying。
This means that these funds will become absolute voids, which in turn will continue to exert significant pressure on the Ports and Centralized Units。
In the early stages of the withdrawal, it is expected that there will be a potential for concentrated sales, which will put pressure on the port and medium-size units, particularly the technology, Internet and new consumption units preferred by investors in the interior。
In contrast, two years of one-way sales pressure, with foreign investment seeing it circumvented during the overlap period, prompting more funds to be sold, with the potential to change the pattern of supply and demand for capital in both the Port and the Centralized Units and to move down the valuation hub。
Of course, high-quality front companies may resist a decline due to good liquidity and sound valuation, but most small capitalization, concept and equity would probably face greater adjustment pressure。
In the long run, irregular funds from the interior of the diaspora will continue to retreat, affecting to some extent the transfer of portfolio, medium-size stock pricing rights to overseas institutions, and the shift in the logic of market transactions from an emotional to a fundamental one, and the structural fragmentation of the plate will continue to widen。
05
What impact does regulation have on domestic markets when illegal cross-border routes are blocked
NEARLY A MILLION AMERICAN SHAREHOLDERS (AND, OF COURSE, THE VAST MAJORITY AT THE SAME TIME) IN HONG KONG, INVOLVING HUNDREDS OF BILLIONS OF DOLLARS, ARE LIKELY TO GRADUALLY RETURN OVER THE NEXT TWO YEARS, NOT TOO LARGE, BUT WITH SIGNIFICANT LOCAL IMPACTS。
First, when illegal cross-border routes are blocked, there will be structural faults in domestic cross-border investment channels。
On the one hand, the port equity threshold of 500,000 assets is sufficient to intercept more than 99 per cent of ordinary investors
Moreover, the mainland shareholders will no longer have any personal channels of compliance to trade in American shares, and will no longer be able to buy British Weeda, Tesla, power reserves, apples, cartoons, and beauties。
ON THE OTHER HAND, THE CROSS-BORDER INVESTMENT DEMAND OF DOMESTIC INVESTORS FOR HIGH-QUALITY GROWTH TRACKS SUCH AS AI, GLOBAL SCIENCE AND TECHNOLOGY, AND OVERSEAS CONSUMPTION IS BOUND TO PERSIST AND TO CONTINUE TO CLIMB, POSSIBLY UP TO A TRILLION-SCALE INVESTMENT DEMAND, WHICH WILL BE CONCENTRATED IN THE SINGLE COMPLIANCE EXPORT OF QDII。
AT THE SAME TIME, HOWEVER, THE QDII LEVEL IS HEAVILY CONTROLLED AND SPREAD SLOWLY BY THE EXTERIOR AUTHORITY, AND THE SUPPLY OF MAINSTREAM INDICATORS, STANDARD 500, AND TECHNOLOGY-TYPE QDII FUNDS IS SCARCE IN THE LONG TERM, AND THE LARGE-SCALE ALLOCATION NEEDS OF ORDINARY INVESTORS CANNOT BE RELEASED AT ALL。
AS OF APRIL 2026, QDII WAS REPORTED TO BE AT A TOTAL OF APPROXIMATELY $176.2 BILLION, OF WHICH EQUITIES WERE ESTIMATED AT $97.3 BILLION, AND THE $5.3 BILLION INCREASE IN MARCH 2026 WAS DEPLETED BY HOT-END PRODUCTS WITHIN DAYS。
OF THE 330 QDIIS IN THE WHOLE MARKET, OVER 60 PER CENT ARE IN A RESTRICTED/SUSPENSED POSITION, WITH A SINGLE DAY LIMIT OF $10 AND $100 FOR THE SUPERINTENDENCY FUND。
MORE CRITICALLY, SCARCITY HAS LED TO THE LONG-TERM CLOSURE OF THE QDII FUND-LEVEL MARKET-REQUIREMENT CORRIDOR, WHILE IN-SITU PRICES ARE DETERMINED SOLELY BY SUPPLY AND DEMAND, INEVITABLY LEADING TO A BUILD-UP OF FUNDS THAT WILL CONTINUE TO PUSH UP IN-SITU PRICES, LEADING TO A SIGNIFICANT OVERPRICE TO REGULARIZE。
THIS MARKET FEATURE IS HIGHLY CONSISTENT WITH THE EXTREME PRICE PREMIUM LOGIC OF THE PREVIOUS MONTHS WHEN THE COUNTRY HAD INVESTED IN SILVER OR OIL AND GAS ETF OVERSEAS。
THE CURRENT DOMINANT US SHARE OF QDIIETF MAINTAINS A SIGNIFICANT PREMIUM OVER THE LONG TERM, WITH A HIGHER PREMIUM FOR SEMICONDUCTOR, TECHNOLOGY-SPECIFIC TRACKS。
AS CROSS-BORDER INVESTMENT DEMAND CONTINUES TO ACCUMULATE IN THE FUTURE, AND QDII SUPPLY IS DIFFICULT TO MATCH WITH INCREMENTAL DEMAND, THIS STRUCTURAL PREMIUM DISORDER WILL SEEM TO PERSIST FOR A LONG TIME, BECOMING THE CORE PAIN OF CROSS-BORDER COMPLIANCE INVESTMENTS BY ORDINARY INVESTORS。
06
There may be another advantage for domestic stock markets。
THIS WAS PRECEDED BY A LARGE POOL OF INTERNALLY DISPLACED PERSONS, WITH THE CORE SET-UP OF THE UNITED STATES OF AMERICA, AI, SEMICONDUCTOR, INTERNET TECHNOLOGY AND THE NEW ECONOMY OF PORT, ESSENTIALLY PURSUING THE GLOBAL PREMIUM OPPORTUNITIES FOR HIGH-GROWTH TECHNOLOGY ASSETS。
WHEN CROSS-BORDER INVESTMENT CHANNELS ARE RESTRICTED, THIS PORTION OF THE RISK-ORIENTED AND FOCUSED FUNDING FOR TECHNOLOGICAL GROWTH WILL GRADUALLY FLOW BACK TO CORE TECHNOLOGY TRACKS SUCH AS AC, SEMICONDUCTOR, HIGH-END MANUFACTURING AND DIGITAL ECONOMY。
In particular, hard nuclear technology champions with high performance certainty, high technical barriers and vast space on the track will likely receive these incremental funding。
IT SHOULD BE NOTED, HOWEVER, THAT THE CURRENT CORE TRACKS OF UNIT A, SEMICONDUCTOR, ARTIFICIAL INTELLIGENCE, AFTER MULTI-WHEELING, THE OVERALL VALUATION IS IN HISTORICAL HIGHS, WITH A PARTIAL BREAKDOWN OF THE LEVEL OF EARNINGS AND NETTING ON THE TRACKS REACHING THE VALUATION CEILING。
The incremental build-up of cross-border flows of funds may result in the creation of funds, or will further push up the valuation of the plate, away from the base support, and trigger phase foams。
For investors, there is a need to move away from purely race-track thinking, to avoid the risk of high-value bubbles, to focus on high-quality targets where performance can deliver, and to guard against the risk of retroactivity。
Concluding remarks
The reorganization of the illegal cross-border voucher trade at the regulatory level is not a “one-size-fits-all” approach to closing cross-border investment channels, but a systematic initiative to regulate market order, protect financial risks, protect investors' interests and promote compliance。
For businesses, compliance is the bottom line for survival, and any attempt to gain short-term benefits by circumventing regulation will ultimately be costly。
For investors, this remediation may be a short-term inconvenience, but in the long term it is necessary to create a safer and more regulated cross-border investment climate。
INVESTORS SHOULD MOVE AWAY FROM THE “CUT-OFF” MENTALITY AND ENGAGE IN CROSS-BORDER INVESTMENT THROUGH LEGAL CHANNELS SUCH AS QDII, PORT EQUITY, WHICH ARE PROTECTED BY DOMESTIC LAW AND HAVE WELL-DEVELOPED INVESTOR PROTECTION MECHANISMS。
The healthy development of capital markets requires joint efforts by regulators, enterprises and investors。
