(Yicai Global) Feb. 14 -- Shares of Bright Smart Securities and Commodities Group surged after the Hong Kong brokerage said the suspension of accounts held by mainland Chinese clients will not impact business and earnings, as most of its profit comes from clients in Hong Kong.

Bright Smart [HKG: 1428] ended today 11.9 percent higher at HKD1.51 (19 US cents) a share, after earlier surging by as much as 14.8 percent.

The stock plunged 12 percent yesterday after Securities Times reported that Bright Smart had informed mainland clients that it would suspend their accounts from Feb. 16 after the China Securities Regulatory Commission said some Hong Kong brokerages had carried out illegal cross-border business in the mainland.

The trading accounts of Chinese mainland clients will be suspended from Feb. 16 until the CSRC or relevant authorities clarify the regulations, Bright Smart announced late yesterday.

Between last April and Jan. 31 this year, Bright Smart’s after-tax profit was about HKD510 million (USD65 million), 98 percent of which came from Hong Kong clients, the firm added, saying the block on mainland accounts will not affect its business performance.

At the end of December, the CSRC told brokers Futu Holding and Up Fintech Holding, also known as Tiger Brokers, that they were prohibited from soliciting Chinese mainland investors, developing new mainland clients, and opening new accounts for mainlanders, because they had carried out illegal securities business. But to maintain market stability, the two firms could continue to allow existing mainland investors to trade.

According to the Securities Times’ report, Bright Smart accounts held by in Chinese mainland clients cannot be used to buy shares, only sell them. They also cannot be used to buy futures, options, leveraged foreign exchange, or precious metals positions, only close them.

Customers should withdraw the balance on their accounts before Feb. 23, Securities Times added, noting that after that day, the balance will be automatically credited to clients’ designated bank accounts.

Securities Times cited industry insiders as saying that Bright Smart’s move was a unilateral action by an individual broker, not a requirement from the regulator. A number of Hong Kong brokers that provide Hong Kong and US stock trading services said mainland clients can still use their accounts as normal.

Editor: Futura Costaglione