(Bloomberg) -- China's largest overseas-listed online brokers said they are in compliance with a tightening of data privacy rules, seeking to quell concerns after the official newspaper of the Communist Party highlighted risks faced by the firms amid Beijing's continuing crackdown on private enterprise.
In statements issued Friday, Futu Holdings Ltd. and Up Fintech Holding Ltd. said they both have proactively complied with relevant regulations, addressing issues raised by the Special Task Force on the Regulation of Apps as far back as in July 2019. The firms slumped 12.4% and 21.2%, respectively, in New York trading on Thursday.
In an analysis on its website, the People's Daily said online brokerages operating across borders run the risk of violating data privacy rules and are in the spotlight as China's personal information protection law takes effect on Nov. 1, pointing to Tencent Holdings Ltd.-backed Futu and Xiaomi Corp.-backed Up Fintech as case studies. The article said user data of both brokers are at risk of being compromised as they are required to provide certain information to U.S. Securities and Exchange Commission.
“Since our founding Futu has insisted that the protection of personal information and data is of top priority,” the company said in a statement. “Futu has been strictly complying with relevant laws and regulations. Going forward, we will continue to actively cooperate with regulatory authorities to better safeguard personal information.”
China has been tightening control over broad swathes of its economy, in particular cracking down on firms that collect data from consumers such as ride-hailing apps and other technology giants. Futu and Up Fintech have been operating in a gray area, allowing millions of Chinese investors to evade capital controls to trade shares offshore in markets such as Hong Kong and New York.
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In a 2016 online Q&A about whether investors can trade foreign securities on platforms including Futu and Up Fintech, the China Securities Regulatory Commission said that it has not given permission to any domestic or international institutions to provide trading such services to domestic investors.
“We have always seen compliance as the bloodline of Up Fintech and takes personal data protection as a top priority,” the broker said in a statement.
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