Chinese regulators banned brokerages from hiring social media influencers to attract new clients, shutting down spigot on one of the most popular ways to acquire clients in an intensely competitive field.
According to a notice dated October 29 seen by Bloomberg News, the China Securities Regulatory Commission told securities firms on Monday that they will no longer be allowed to work with large influencers who are not licensed brokers. The notice said that investment recommendations through live streaming have also been banned.
The CSRC said the brokerage staff should maintain fairness and professionalism while commenting on the economy and markets via webcasts, and should avoid drawing attention by using “sensational words” or “strange associations”.
Authorities in Beijing have launched an initiative to develop a “gentle” online environment to facilitate the “sustainable and healthy development” of the economy and society. China is tightening controls on broad sectors of its economy, cracking down on everything from fintech platforms to property developers to limit financial risks.
CSRC did not immediately respond to a request for comment.
As China fully opens up its $54 trillion financial industry to global giants, the country’s more than 130 brokerages are under increasing pressure to maintain market share and win new businesses. To acquire more clients, major firms including Huatai Securities Company and East Money Information Company as well as smaller brokerages with few outlets have worked with influencers by paying fees for traffic flow on social media platforms.
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