Hong Kong SFC: Licensed Firms May Continue Serving Existing Mainland Clients but Must Not Provide Services Within the Mainland
Miles Bennett
Hong Kong's SFC clarified its May 22 circular: licensed firms may continue serving existing mainland clients and open new accounts, so long as no service is provided from within the mainland — drawing a clear line between compliant and non-compliant cross-border business.
Can existing mainland clients still be served?
The SFC confirmed that licensed firms may continue providing services to existing mainland Chinese clients, provided those services are not delivered within mainland China.
Firms must also comply with Hong Kong law and the regulations of every applicable jurisdiction.
This means → the test is not "Is the client a mainlander?" — it is "Where does the service take place?"
Can firms still open new accounts for mainland investors?
Yes. In FAQ (9) of the circular, the SFC confirmed licensed firms may continue opening new accounts for mainland investors.
"Mainland investor" is defined as anyone using a PRC resident identity card and/or PRC passport as identification.
All standard compliance requirements still apply: KYC, customer due diligence, required declarations, and designated bank accounts.
What is happening on the mainland side?
On May 22, eight mainland regulators led by the CSRC jointly issued an implementation plan to crack down on illegal cross-border securities, futures, and fund activities.
The goal: a full two-year sweep to eliminate illegal offshore operations targeting mainland investors.
In plain terms = the mainland is going after unlicensed offshore brokers operating *inside* the mainland — not Hong Kong licensed firms themselves.
What does this mean for mainland clients with existing accounts?
Under the plan, existing onshore clients may only sell positions and withdraw funds — no new purchases allowed.
Onshore websites, trading apps, and supporting servers will be shut down entirely.
This means → the grey-zone model — sitting in the mainland, trading Hong Kong or U.S. stocks via onshore servers — is over.
Where exactly is the line?
The SFC simultaneously updated its rules for mainland clients opening accounts in Hong Kong. The compliant path remains open.
What is blocked is "providing cross-border securities services from within the mainland" — licensed or not.
This reflects a coordinated move on the same day: the mainland cleans up illegal cross-border activity, Hong Kong clarifies the compliance floor — each regulator on its own turf, but pointing the same direction.
Content is for reference only, not financial advice.