Fitch: Tighter Mainland Enforcement Hits Online Brokers More Than Large Firms

Fitch Ratings said stricter enforcement in the mainland on brokers providing offshore investment services to mainland residents is weighing mainly on online brokers that have not strictly complied with regulatory requirements. According to Ming Pao, Fitch’s Asia-Pacific non-bank financial institutions ratings head Li Xinjia said client due diligence to ensure account-opening processes meet requirements is not new for brokers, but enforcement has recently become more stringent. Li said larger brokers with bigger market share did not show major issues in recent investigations, while the impact is concentrated on online brokers with weaker compliance. He added that tighter supervision helps ensure securities firms operate in a fairer competitive environment, which is positive for the market’s healthy development.