Due to concerns about data security and capital outflows, Chinese regulators are planning to prohibit online brokerages such as Futu Holdings Ltd and UP Fintech Holding Ltd from offering offshore trading services to mainland clients, according to people familiar with the matter.

Two of the largest players in the sector are Nasdaq-listed Chinese firms, and a ban would prevent millions of retail investors in mainland China from easily trading securities in markets such as the United States and Hong Kong.

According to one of four sources, firms will be notified of a ban "in the coming months."

Futu and UP Fintech, both of which have been in operation since 2011 and 2014, allow mainland clients to open offshore accounts using personal information such as ID cards, bank cards, and tax records.

Both are registered with the Securities and Futures Commission in Hong Kong, but this registration does not extend to the mainland. According to the sources, there is no mainland license for online brokerages that specialize in cross-border trades.

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Futu, a $5.5 billion company by market capitalization, said in a statement to a major newswire that it had been communicating with Chinese authorities but had not received any formal orders, but that it was continuing to operate normally.

It warned in an April prospectus for a follow-on share offering that a shift in stance by authorities with broad discretion in interpreting regulations could have an impact on its business.

UP Fintech, which is worth $737 million, stated that it has been following global regulators' rules and will comply with and implement any new rules.

Futu and UP Fintech shares were down 6.8% and 5.5%, respectively, in premarket trading on Friday.

In October, Chinese authorities expressed concern about "cross-border" brokerages, exacerbating declines in both firms' shares, which have fallen more than 80% since the year's peak in February.