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China’s Kaisa Financial Halts Securities Services for Mainland Clients
Liao Shumin
DATE:  Nov 18 2021
/ SOURCE:  Yicai
China’s Kaisa Financial Halts Securities Services for Mainland Clients China’s Kaisa Financial Halts Securities Services for Mainland Clients

(Yicai Global) Nov. 18 -- Kaisa Financial Group suspended securities services for clients in the Chinese mainland yesterday, saying it was a business decision, made out of operational risk considerations.

The move had nothing to do with the group’s financial situation, the brokerage said in a statement posted online yesterday, in response to doubts over its financial position.

The wholly owned unit of property developer Kaisa Group Holdings recently said that in response to regulators’ compliance requirements for cross-border brokerages, it planned to suspend services to mainland customers and asked them to move out all securities and cash deposited with the Hong Kong-based firm by Nov. 19.

Though Hong Kong’s financial authorities have not yet issued any such regulations, Kaisa Financial took into consideration mainland regulators’ recent strict attitude to cross-border brokerages and so decided on a preemptive pause to avert operational risks and protect its reputation, Caixin reported on Nov. 16, citing a company insider.

Kaisa Financial may actually exit the mainland market after the decision amid its parent company’s debt crisis, Securities Times reported today, city an industry insider. The broker’s business has not improved in many years and it has even encountered problems, the report added.

The main reason for Kaisa Financial’s decision to halt securities services for mainland clients “should not be regulators’ compliance requirements for cross-border brokers,” the industry insider said. Kaisa is “a sole case, as other brokers are providing services as normal.”

Kaisa Financial is only licensed for securities trading. It began to focus on the cross-border internet brokerage business from 2019, providing services such as online account opening, quotes, trading and real-time information through Kaisa Global, a stock-trading platform listed in Hong Kong and New York.

Some wealth management products issued by partner Kin Hang Wealth Management for which Kaisa Group Shenzhen, a unit 100 percent owned by Kaisa Group, provides the guarantee became overdue on Nov. 9. The overdue products amounted to more than CNY300 million, with the products worth about CNY12.7 billion in total, per data from Kaisa Group Shenzhen.

Trading of Kaisa Group’s shares has been suspended since Nov. 5, as the board reviews its financial position, according to the firm’s most recent filing.

Editor: Peter Thomas

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Keywords: Kaisa Financial Group