(Bloomberg) — Up Fintech Holding Ltd., which runs one of China’s most popular trading apps, is cutting about a fifth of its workforce after warnings that allowing Chinese to invest abroad may run afoul of the nation’s strict capital controls and data privacy rules.
Xiaomi Corp.-backed Up Fintech — known as Tiger Brokers — is in the process of firing about 200 employees across divisions from research to business development, according to people with knowledge of the matter who asked not to be named discussing private information. Many have already left after receiving severance packages and it’s unclear if more will be let go, the people said.
A spokesperson for Tiger disputed the size of the layoffs, saying the planned total is around 100. “The decision enables us to optimize our organizational structure and increase efficiency,” she said, noting Tiger is “working hard to give all the support we can to those affected.”
A senior central bank official has twice publicly blasted the legitimacy of online brokers, which allow millions of Chinese investors to trade in markets such as Hong Kong and New York. The job cuts also come amid a near market meltdown in mainland China as a crackdown on the private sector and a now widening Covid outbreak threaten economic growth.
Sun Tianqi, head of the financial stability bureau at People’s Bank of China, said in articles published in February and last year that online brokerages operating across the border were engaged in illegal activities. The Communist Party’s main newspaper, The People’s Daily, has also weighed in, saying that these firms run the risk of violating data privacy rules.
Listed in New York, the shares of Up Fintech have slumped 83% over the 12 months. Its biggest rival, Tencent Holdings Ltd.-backed Futu Holdings Ltd., has tumbled 78% over the same period.
Tiger Brokers has about 1,000 employees globally, with nearly half working in research and development, according to its website. It had about 673,000 funded accounts at the end of 2021, according to a March earnings call.
The job reductions come amid an increasingly difficult time for the private sector in China, with President Xi Jinping cracking down on an array of companies including its biggest technology firms, sending markets reeling. China has also made it harder for domestic firms to list abroad. Now a pandemic outbreak, and subsequent lockdowns as China pursues Covid zero, is threatening growth further.
China’s benchmark stock index is down more than 30% from its high-point in early 2021.
Robinhood Markets Inc., the popular U.S. trading app, is also slashing jobs, the company said in a statement Tuesday. The firm plans to let go of about 9% of its employees.
Rapid headcount growth led to some duplicate roles and job functions, and more layers and complexity than are optimal, Chief Executive Officer Vlad Tenev said in the statement. The benchmark Nasdaq index has slumped 20% this year.
(Adds Tiger comment in third paragraph.)
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