(Yicai Global) Feb. 16 -- China’s securities regulator has clarified the policy on brokerages’ cross-border business expansion after market concerns followed the suspension of Chinese mainland clients’ trading accounts by a Hong Kong broker, which said regulators had not yet issued clear account opening guidelines.

Mainlanders can continue to trade using existing offshore accounts if they strictly comply with the relevant foreign exchange control provisions when transferring funds, the China Securities Regulatory Commission said yesterday, adding that it prohibits non-licensed offshore institutions from soliciting mainland investors and opening new accounts for them.

Hong Kong-based Bright Smart Securities and Commodities Group said on Feb. 13 that it would suspend Chinese mainland clients' accounts from today until the CSRC or relevant authorities clarify the regulations. Other offshore securities companies reportedly took similar steps.

According to China's forex management regulations, mainlanders have an annual foreign exchange purchase limit of USD50,000, but they cannot use the money to buy homes and life insurance offshore, make securities investments, or join insurance and other capital projects.

Most brokerages with cross-border business are actively implementing the requirements and stopped opening illegal accounts, the CSRC noted. They should not restrict transactions of existing customers without any reason, it added.

Moreover, the CSRC will urge brokerages and their units to implement the relevant laws and regulations and steadily promote the rectifications to maintain normal market order and protect the legitimate rights and interests of investors.

The regulator also said it will continue to strengthen cooperation between domestic and foreign watchdogs to endure the smooth progress of the rectification work and maintain market stability.

Editor: Futura Costaglione