Investing.com – Shares of Futu Holdings (NASDAQ:) and Up Fintech (NASDAQ:) plunged Thursday on a Reuters report that the U.S.-listed Chinese online brokerages face regulatory risks in their home as the country’s new personal data privacy law takes effect next month.
Futu fell 15% and Up Fintech fell 23% on the Nasdaq.
According to an analysis on the website of the official People’s Daily the Reuters report referred to, they could violate data privacy rules, and also run compliance risks.
Futu and UP Fintech don’t have brokerage licenses on the mainland but enable mainland China individuals to invest in overseas stock markets such as the U.S. and Europe. Citizens can simply open accounts online after submitting personal information related to ID cards, bank cards and tax records. The People’s Daily piece wondered where the data goes once it’s collected.
The world’s second largest economy will implement the Personal Information Protection Law from November 1, complementing the Data Security Law, in regulating cyberspace and safeguarding national security, Reuters said.
Tighter compliance for online brokerages is one in a series of steps the Chinese authorities have undertaken over the last few months to regulate internet entities and increase oversight of the end-use of private data. There has also been a broader policy push towards more equitable distribution of wealth and greater welfare.
Steps have included less commission being charged by online food delivery chains and cab aggregators, more rest for cab drivers, regulating time children spend on online games and increased scrutiny of casinos in Macau.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.