(Yicai Global) Oct. 15 -- Shares in Futu Holdings and UP Fintech Holding plunged yesterday after Chinese state media said the two Chinese cross-border online brokers still have data security issues.

Futu’s share price [NASDAQ:FUTU] plummeted 12.41 percent yesterday to close at USD73.81, while UP Fintech’s stock [NASDAQ:TIGR] crashed 21.19 percent to end at USD8.18.

Internet brokers including Futu and UP Fintech still have issues with how they store the user information they collect and where the data goes, People's Daily Online reported yesterday. The criticism comes in the run-up to the country’s first personal information protection act coming into effect on Nov. 1.

Futu is in regular contact with regulators and voluntarily conducts self-audits and self-checks, the Hong Kong-based firm said in response. It also hires an external security team to provide safety inspection reports and is continuously strengthening its risk prevention capabilities.

The two companies were among a number of fintech firms who were found by regulators back in July 2019 to have issues regarding the unauthorized disclosure of personal data and were ordered to improve their personal information protection procedures.

While they might claim to have cleaned up their act, there are more hurdles to clear. Online brokers such as Beijing-based UP Fintech request detailed user information, including facial recognition, in order to transfer funds into China.

As they are listed on the Nasdaq, Futu and UP Fintech are required to submit this data to US authorities. When China’s Personal Information Protection Law comes into effect, they will only be able to submit user data to overseas bodies after approval from the country’s internet regulators.

Also, companies which are not members of the Qualified Domestic Institutional Investors program nor eligible to take part in the Shanghai-Hong Kong Stock Connect program are not qualified to provide Chinese investors with overseas securities trading services.

Editor: Kim Taylor