The China Securities Regulatory Commission (CSRC), working with seven other agencies including the central bank, said Tiger, Futu and Longbridge would be penalised for operating without approval. Futu and Tiger parent UP Fintech Holding saw shares plunge more than 30 per cent in US pre-market trade. The CSRC said illegal gains would be confiscated.

Futu disclosed it faced a proposed penalty of CNY1.85 billion ($271 million). UP Fintech said its Beijing bureau imposed fines of CNY308.1 million and ordered confiscation of CNY103.1 million in illegal income. Tiger said it would cooperate fully, while Longbridge pledged to implement rectification measures and stressed client funds remained safe.

Regulators said the firms would have a two-year grace period to wind down illegal activities. During that time, customers may only sell existing holdings and withdraw funds, with no new investments allowed. The crackdown also hit US-listed Chinese companies, with PDD, Alibaba and JD.com falling between 3.5 and 6 per cent.

Hong Kong's Securities and Futures Commission said it found "significant deficiencies" at 12 brokers and ordered stricter checks on account openings and funding sources. The city's capital markets raised HK$209.9 billion ($26.8 billion) in the first quarter, topping global rankings, according to KPMG.

Analysts said the penalties appeared lenient but warned harsher fines or criminal prosecution could follow. "The government wants to ensure that any outbound capital flows are under its scrutiny," said Gary Ng, senior economist at Natixis. Lawyer Zhan Kai of Dacheng added that tougher measures could not be ruled out.