What happened Shares of two big Chinese online brokerages fell sharply today after more bad regulatory news for the industry. Shares of Futu Holdings Ltd (NASDAQ: FUTU) traded nearly 16% down as of 1:55 p.m. EDT, while shares of Up Fintech Holding Ltd (NASDAQ: TIGR) were down nearly 18%. So what Earlier today, an official at the People's Bank of China (PBOC), China's central bank, said online brokerages would not be in compliance with soon-to-be passed laws if they do not have an official brokerage license in China. "Cross-border online brokerages are driving in China without a driver's license. They're conducting illegal financial activities," Sun Tianqi, China's head of the Financial Stability Department of the PBOC, said Wednesday, according to a transcript of his speech. The comments further complicate the regulatory environment for Futu and Up Fintech, two online brokerages that help Chinese citizens purchase foreign stocks online. In November, new rules in China will be implemented that regulate how online data is used. Futu and Up Fintech don't have domestic brokerage licenses but instead allow people to open accounts after they provide their personal data. Image source: Getty Images. Now what The pending laws and comments from Tianqi are certainly threats to Futu and Up Fintech's business. More guidance will be needed from regulators in order for the two firms to figure out whether they are indeed out of compliance, and if so, what they need to do to get back into compliance. Chinese stocks often come under the crosshairs of regulators, which makes them much riskier. 10 stocks we like better than Futu Holdings LtdWhen our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Futu Holdings Ltd wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of October 20, 2021 Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source