Futu Holdings Stock

Futu Holdings Limited operates as a financial technology platform transforming the investing experience with its fully digitalized securities brokerage and wealth management product distribution services.

The company operates its business mainly through Futu Securities International (Hong Kong) Limited (Futu Securities), which is a HK SFC (Securities and Futures Commission of Hong Kong)-regulated entity that holds the relevant licenses related to the company’s securities brokerage and wealth management product distribution business.

The company also conducts research and development activities in China through Futu Network Technology (Shenzhen) Co., Ltd. (Futu Network) and the VIEs (Shenzhen Futu (Shenzhen Futu Network Technology Co., Ltd.) and Hainan Futu (Hainan Futu Information Services Co., Ltd.)).

In June 2022, the company acquired 100% of the issued share capital of a Japanese company and renamed it Moomoo Securities Japan Co., Ltd., or Moomoo Securities Japan, and it became the company’s wholly-owned subsidiary. Moomoo Securities Japan holds the Financial Instruments Business Operators (FIBO) license in Japan. Moomoo Securities Japan is also a member of Japan Securities Dealers Association (JSDA), Japan Investment Advisers Association (JIAA), and a member of Tokyo Stock Exchange and Osaka Exchange.

A securities brokerage service provider at inception, the company is an all-rounded online financial services platform, seamlessly integrating services and products, including trading, wealth management product distribution, market data and information, user community, investor education, and corporate services with a focus on the online securities brokerage market. As an intuitive and easy-to-navigate platform, the company was serving approximately 19.6 million users as of December 31, 2022. The company provides a comprehensive range of investment products, including equities and derivatives across major global exchanges, margin financing and securities lending, as well as fund and bond investments, leveraging over 50 licenses, registrations and memberships across Hong Kong, Singapore, the United States, Australia and Europe. The company’s vibrant user community further engages the company’s users and provides them with direct access to listed companies, fund houses, exchanges, media and research institutions that have accounts in the company’s user community through communication with their representatives. In addition, the company’s platform equips its users with necessary investment knowledge for them to make informed investment decisions.

The company has developed a proprietary and highly automated technology infrastructure encompassing every aspect of its business operations, from account opening, fund transfer, trading and investment to risk management. The company’s team is centered around research and development.

Platform

The company operates a leading technology-driven online securities brokerage and wealth management product distribution platform, which enables the company to digitally deliver a wide range of products and services to its users and clients in an integrated way. The company enables an omni-terminal access to the company’s platform from mobile phones, tablets and computers, either through the company’s purpose-built applications or internet browsers.

The company’s primary platform, Futubull, is mainly available to users based in Hong Kong and Mainland China. Futubull allows investors to trade securities across major exchanges in Hong Kong and United States and qualified securities under Stock Connect listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange quickly and securely, with access to margin financing and securities lending. The company also offers wealth management product distribution services through the company’s Money Plus brand on its Futubull and moomoo platforms, where the company’s clients can get access to a suite of mutual funds, private funds, structured products and bonds. In addition to the company’s core investment offerings, the company provides its users with a variety of value-added services designed to facilitate the investing process, including real-time stock quotes, market data and news, as well as an interactive user community where the company’s users can exchange investment views and experience. The company offers corporate services, such as IPO distribution, investor relations and marketing, as well as ESOP solution services. The company also provides trust services to corporate clients.

As part of the company’s international expansion, the company developed and launched moomoo, the international version of Futubull, first in United States in 2018 and more recently in Singapore in March 2021 and Australia in 2022. The company’s moomoo platform provides tailored services to clients in the United States, Singapore and Australia through the company’s local licensed entities Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. (Moomoo Financial Singapore), and Futu Securities (Australia) Ltd. (Futu Australia), respectively. The company also launched moomoo in Japan in October 2022, providing services, including market data, financial news, paper-trading and an investment community to users in Japan through the company’s licensed entity, Moomoo Securities Japan, under local regulatory requirements.

The company’s platform is underpinned by a premier user experience. The company provides completely online-based account opening services. The company has streamlined the account opening, fund transfer and trade execution processes on the company’s platform to provide convenient and seamless investment experiences. Account opening on the company’s platform requires filling out an online application which takes less than three minutes, followed by verification procedures facilitated by automated risk management systems. The company also provides easy-to-use fund transfer services facilitating swift deposit and withdrawal of funds, allowing for bank-to-brokerage fund transfers in as fast as a few seconds. In addition, the company provides its users and clients with access to all of the company’s products and services from a single profile on the company’s platform.

The company serves both users and clients. The company’s ‘users’ access Futubull and moomoo through its mobile or desktop applications or its website with registered user accounts. The company’s ‘clients’ are its users who open one or more trading accounts with the company; and the company’s ‘paying clients’ are its clients with assets in their trading accounts with the company.

Services

The company provides its users and clients a comprehensive set of services throughout their investing experience. The company’s core services include trade execution, margin financing and securities lending, as well as wealth management product distribution. The company provides a variety of value-added services in addition to the company’s core offerings, many of which are free of charge, to address the company’s clients’ broader investment demands, as well as increase general client engagement. All the company’s services can be accessed through the company’s platforms with a single profile across various terminals.

Retail Services

Account Opening and Fund Transfer

Account Opening

The company’s users and clients can access all of its products and services with a single profile created on the company’s platform. Opening a securities trading account has historically been a time-consuming and paper-intensive process. The company’s users can open multiple trading accounts for different products under a single profile at once. Users can complete an account opening application online in as little as three minutes on the company’s platform.

For investors who are residents in Hong Kong, the United States, Singapore and Australia, the two steps involved in opening trading accounts with the company is set forth below:

Step 1: Online Application: Users of the company’s Futubull or moomoo platform, either through the company’s mobile or desktop application, can click an embedded link to submit an online account opening application by following simple instructions. Users are required to submit personal information, employment history, financial conditions, source of funds and other related information. Users must also read and consent to a standard client agreement and other required documents and review a disclaimer audio which discloses trading risks presented by the company’s licensed personnel.

Step 2: Verification Procedures: Upon receiving a completed online application, the company’s automated risk management system will proceed to verify the applicant’s identity. The company automatically uses the information provided by the user to perform know-your-client and anti-money laundering screening. If a user’s application passes the screening, the user is approved for a trading account. When the company discovers errors or inconsistencies during the company’s examination of the applications, a second tier of review may require the users to go through a few additional steps to authenticate their identities or verify their credentials.

The company’s prospective clients outside of Hong Kong can also open accounts with the company following similar procedures with specific adjustments based on relevant regulatory requirements. The vast majority of the company’s clients have opened accounts with the company online.

Corporates that would like to open an account with the company is required to satisfy its counterparty risk requirements, such as providing a deed of guarantee. In addition, the company performs its corporate due diligence procedures (including but not limited to, obtaining and verifying its identity and its ultimate beneficial owner, and conducting background check and client risk assessments) in accordance with the anti-money laundering guidelines issued and updated by the HK SFC and MAS from time to time. After the corporate is onboarded, the company monitors their transactions and conduct due diligence on an ongoing basis.

Fund Transfer

The company provides timely and free fund transfer services to the company’s clients, enabling them to capture fast-moving investment opportunities. The company supports various fund transfer methods for payment of Hong Kong dollar, U.S. dollar, offshore RMB, Singapore dollar and Australian dollar. For payment from Hong Kong bank accounts, the company supports fund transfer via electronic direct debit authentication (eDDA), bank-securities account transfer, fast payment system (FPS), internet banking, ATM/over-the-counter transfer and cheque. For payment from bank accounts of other overseas regions, the company supports fund transfer via ACH, wire transfer, telegraphic transfer, direct debit authentication (DDA) and/or other local payment apps. The company does not allow payment from PRC bank accounts, and the company does not provide service of currency conversion from Renminbi to other currencies.

Trading Execution

The company provides easy-to-use trade execution services, allowing the company’s clients to trade securities, such as stocks, ETFs, warrants, options and futures, across different markets. The company serves clients from different countries and regions through its licensed subsidiaries in Hong Kong, Singapore, the United States and Australia:

Hong Kong: The company operates its securities brokerage business in Hong Kong through Futu Securities, the company’s wholly-owned subsidiary incorporated in Hong Kong. The company has been licensed by the HK SFC to carry out securities dealing and has become a participant of the Hong Kong Stock Exchange as a licensed broker since 2012. The company also cooperates with CCASS to provide clearing and execution services for the company’s brokerage business involving securities listed on the Hong Kong Stock Exchange and stocks qualified under Stock Connect listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange.

Singapore: The company carries out its operations in Singapore through the company’s Singapore-incorporated subsidiary, Moomoo Financial Singapore, a licensed corporation registered with the Monetary Authority of Singapore with the Capital Markets Services License.

The U.S.: The company carries out its operations in the U.S. through the company’s U.S.-incorporated subsidiaries, including Moomoo Financial Inc., a licensed broker-dealer in the U.S., and Futu Clearing Inc., a licensed provider of clearing and settlement services for securities transactions in the U.S. financial markets through the Depositary Trust Clearing Corporation and its subsidiaries.

Australia: The company carries out its operations in Australia through the company’s Australia-incorporated subsidiary, Futu Australia, which holds an Australian Financial Services License granted and regulated by the Australian Securities and Investments Commission.

The company provides comprehensive order types to meet its clients’ different trading strategies, including limit/market order, auction limit/market order, odd-lot order, stop loss limit/market order, touch limit/market order, trailing stop loss limit/market order and TWAP (time weighted average price) /VWAP (volume weighted average price) order. In addition, the company provides API services, which allow clients to trade through the company’s platform using their own program.

The trade execution process is entirely online and automated. The company aggregates orders simultaneously and form trading instructions which are subsequently delivered to respective exchanges. Funds or securities are then transferred to or from the company’s accounts upon settlement, which the company then further remit back to the relevant trading accounts, after deducting the fees for the company’s securities brokerage services, and are normally settled within two business days.

As a licensed securities broker in Hong Kong with integration into the trading systems of the Hong Kong Stock Exchange and CCASS, the company can independently manage all steps involved in processing securities transactions, including order confirmation, receipt, settlement, delivery, dividend collection and record-keeping, for securities listed on the Hong Kong Stock Exchange, including stocks, ETFs, warrants, options, futures, callable bull/bear contracts and stocks under Stock Connect listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange. The company also provides new share subscription and proprietary grey market trading services (also known as dark pool trading services) for IPOs on the Hong Kong Stock Exchange. Additionally, the company had 502 throttling controllers connected to the trading system of the Hong Kong Stock Exchange as of December 31, 2022, allowing the company to execute a large number of trading transactions simultaneously and respond quickly to sudden surges in order volumes. As of December 31, 2022, the company was capable of processing 1,004 Hong Kong listed securities trades per second.

For securities, including stocks, options and futures traded on the major exchanges in the U.S., the Singapore Exchange and the Australian Securities Exchange, the company aggregates trade instructions from clients and, without disclosing underlying client names or fund details, collaborate with qualified local third-party clearing brokers for execution and settlement. In most cases, the agreements the company enters into with such third-party clearing brokers are for an indefinite term, charging a tiered commission rate which they deduct directly from the company’s account with them. In the case of securities traded on the major U.S. stock exchanges, the company also executes and settles transactions through its self-clearing business except clearing for over-the-counter market and certain other products for which the company is in the process of developing its support capabilities. From the company’s client’s perspective, the trading process is seamless as the company handles all client communications and touchpoints, including delivery and receipt of funds. The company intends to further enhance its self-clearing coverage and continue to develop the company’s self-clearing business. The company also provides new share subscription services in relation to selected IPOs on the New York Stock Exchange, the Nasdaq Stock Market and the Singapore Exchange.

Margin Financing and Securities Lending Services

The company provides real-time and cross-market securities-backed financing to clients.

Margin Financing

The company started to offer margin financing to clients who trade securities listed on the Hong Kong Stock Exchange, the major exchanges in the U.S., qualified securities under the Stock Connect listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange and securities listed on the Singapore Exchange in July 2016, February 2017, July 2018 and January 2022, respectively.

The company’s trading system can automatically pledge cross-market account assets so that the value in a client’s multiple trading accounts, which may include cash in different currencies and acceptable securities listed on different markets, will be aggregated when calculating the value of the client’s collateral based on real time market foreign exchange rates.

The company’s clients are eligible for margin financing services when they hold securities that are acceptable as pledges to the company in their accounts. The credit line for each eligible client is determined based on the value of the securities across all of his or her trading accounts. The company’s eligible clients need to open margin financing accounts with the company to enjoy such services. The eligible clients need to confirm the use of margin financing services when the funds in their accounts are not sufficient to purchase the desired securities and there is still sufficient balance in their credit lines.

When the company launched its margin financing business, the company financed mostly from its own working capital and shareholder loans. The company has since diversified the funding source of the company’s margin financing through collaboration with the company’s long-term independent third-party financial institution partners, which are all licensed banks or securities firms in the jurisdictions where the company operates, where the company can combine collateral from the company’s clients into portfolios and pledge the portfolios to financial institutions for commercial loans with sound credit extension terms. For margin financing services related to securities listed on the Hong Kong Stock Exchange and major exchanges in the U.S., the company has entered into loan facility agreements with commercial banks in which the company agrees on the maximum facility limit, maturity and annualized interest rates.

Securities Lending

For clients who trade securities listed on the Hong Kong Stock Exchange and major exchanges in the U.S., the company offers securities lending service which allows the company’s clients to pursue short-selling strategies. The company launched its securities lending services for the U.S. listed securities in February 2017 and for Hong Kong listed securities in December 2020. To borrow securities, the company’s clients must pledge cash or acceptable securities from their trading accounts with the company. For securities lending that the company collaborates with third-party partners, the interest rate that the company charges its clients is based on an annualized interest rate charged by its securities lending partners, plus a certain premium that the company earns as interest income which is calculated based on the market value of securities borrowed by the company’s clients, the duration of the borrowing and the short-selling interest rate.

In October 2019, the company launched the Stock Yield Enhancement Program with a third-party brokerage company, allowing clients to earn interest on their U.S. securities positions by lending to such third-party brokerage company. The company’s clients can choose to opt in and out of the program at any time. When clients choose to participate in the program, the company transfers their U.S. securities positions into a stock yield enhancement program account with the third-party brokerage company. Any interest income earned from these securities borrowed from the company’s clients is split among the third-party brokerage company, the client and the company on a monthly basis, after the company receives payment from the third-party brokerage company. As of December 31, 2022, the company offered its Stock Yield Enhancement Program primarily with the company’s U.S. subsidiary, Futu Clearing Inc., with the remainder conducted in cooperation with a third-party brokerage company.

Wealth Management Product Distribution Services

The company offers online wealth management product distribution services under Money Plus brand through the company’s Futubull and moomoo platforms, which provide the company’s clients with access to mutual funds, private funds, bonds and other wealth management products, catering to their different investment targets and risk preferences.

Mutual Funds: The company selectively works with established fund houses to distribute their fund products, including money market, fixed income, equity, balanced and commodity fund products. In addition, the company’s clients can opt to automatically invest idle cash in their accounts to money market funds to earn interest, which can be redeemed upon trading. The company’s clients can also choose to rebalance their fund allocation manually or automatically according to portfolio changes made by selected portfolio managers.

Private Funds: In June 2020, the company began to offer private funds on Futubull, including fixed income funds, hedge funds and alternative investments, to professional investors only. Professional investor clients can view private funds information and make purchases on Futubull. The company collects client orders and submit them to the corresponding fund houses after the deadline of the subscription or redemption of the private fund products. After the fund houses confirm the subscription or redemption orders, for the subscription orders, the company will confirm the shares of funds to the clients, and for the redemption orders, the company will confirm the net asset value and transfer the amount to the clients’ accounts after receiving the proceeds from the fund houses.

Structured Products: In June 2022, the company started to offer structured products on Futubull, including Sharkfin, Snowball and FCN notes to professional investors. These types of notes usually have certain fundraising period when clients can subscribe for the notes, and the company will aggregate and place the orders to the issuers after the fundraising period. Also, clients can customize the notes in terms of structures, knock-out barriers, coupons and all other variables.

Bond Trading: In September 2020, the company launched its bond trading services on Futubull for fixed income securities. For bond trading, the company charges the individual paying clients a fixed commission rate based on the trading volume, a platform service fee per transaction and an annualized fee on settlement as custodian. The company does not charge bond issuers any fees.

Cash Sweep: The company started to offer cash sweep services to Moomoo Financial Inc. clients in November 2021 per their consent. Cash sweep services automatically deposit a client’s idle U.S. dollar cash into interest-earning bank accounts maintained by the company every working day. This service allows clients to earn interest income on their idle cash, while such cash remains available for trading as the cash deposited in the bank (‘swept cash’) can be redeemed upon trading. When clients’ idle cash (including swept cash) is greater in amount than the swept cash, the difference will be transferred from the securities account to the bank, and when the idle cash is smaller in amount than the swept cash, the difference will be automatically withdrawn from the bank to the securities account. In terms of fund flow, the company opens corporate accounts with banks to deposit clients’ idle cash at floating or fixed interest rates. The company provides its cash sweep clients with interest income at certain interest rates, and the difference between interest income earned on the company’s corporate accounts opened with banks and the clients’ interest income the company pays to them at pre-agreed interest rates after deducting service fees becomes the company’s income.

The company may enter into distribution or sub-distribution agreements with fund houses or other distributors and issuers to offer funds and structured products. Fund houses or third-party platforms and issuers appoint the company to distribute relevant fund products and pay commissions to the company according to the terms of such agreements. At the same time, the company is expected to comply with the terms specifying sales behavior in the distribution agreement. The company does not disclose client information to the fund houses the company collaborates with, and executes transactions solely through the company’s own aggregated accounts. The company’s clients complete the entire transaction, access updated transaction records and monitor changes in positions through the company’s Futubull and moomoo platforms. The relevant fund management fees are charged by the funds, and are reflected in the net asset value of the funds.

As of December 31, 2022, 278,454 clients held the company’s wealth management products. As of December 31, 2022, the company had established partnerships with 73 reputable asset management companies, and offered 158 fund products to clients on Futubull and 111 mutual fund products on moomoo to clients in Singapore.

Market Data and Information Services

The company further enhances the investing experience with market data and information services, such as news and powerful analytical tools, providing clients with a data-rich foundation to simplify the investment decision-making process.

Market Data

The company provides real-time stock quotes across equity markets in Hong Kong, Mainland China, the United States, Singapore, Australia and Japan. The company’s Hong Kong Level II stock quotes are free for all Mainland China-based clients, and for a monthly fee for clients based elsewhere. The company also offers a variety of advanced stock quote services to the company’s clients, for which the company charges a monthly fee.

The company provides a number of advanced and intuitive tools which allow the company’s users and clients to customize the manner in which they monitor the capital markets. For instance, they can filter the broader market across a range of criteria, including industry, valuation, trading volume and price volatility over a certain period of time.

On an individual company basis, the company’s users and clients can review and track detailed fundamental and technical analyses, including recent transaction details, such as trading volumes by major brokers, historical and current valuations, analyst ratings and target prices, operating and financial metrics, compiled news, and other company specific content.

For each mutual fund, the company’s users and clients can monitor fund performances, review detailed quantitative analyses, read complied news and fund specific content, and understand fund basics such as duration, top holdings and geographic and industry concentrations.

Information Services

The company distills investment information and trends into engaging, accessible and diversified content, guiding investors along their investing experience and helping to simplify the decision-making process. The company’s information services generally include real-time news alerts, earnings releases and corporate announcements, topical industry or company-level deep dives and proprietary data flows, such as IPO pipeline that the company complied from external sources. The company’s information services are provided to the users free of charge.

The company aggregates and curates its content through the company’s internal content creation team and its collaboration with third-party resources, including leading international news agencies and market centers. The company delivers its content across different formats, including short-form news, graphics and extensive articles. Content is grouped by animated tags that facilitate easy searches and allow the company’s users and clients to customize information feeds.

User Community

The company broadens its reach and promote the exchange of information through NiuNiu/Moo Community, the company’s social network services on Futubull and moomoo platforms, which has embedded social media tools to create a network centered around users. This user community reduces information asymmetry, supports the discovery of investment opportunities, facilitates investment decision-making and establishes a sense of camaraderie among the company’s users.

On NiuNiu/Moo Community, the company provides a variety of interactive tools and free content, including:

Courses: The company provides its users with necessary investment knowledge through pre-recorded videos and graphical presentations on financial terminology, investment products and other investment related topics, leveraging both the company’s in-house and external resources;

Live Broadcasts: The company’s users can watch live broadcasts hosted by enterprise clients such as listed companies and fund houses. Live broadcasts include earnings results, product launch and promotions, as well as investor Q&A sessions, which can be later replayed on demand; and

Forum: The company’s clients can post and share their trading history, investment views and market insights, and interact with each other.

The company has fostered a vibrant NiuNiu/Moo Community, which serves as an open forum for users to share insights, ask questions and exchange ideas, thereby enabling the company’s users to maintain a strong sense of belonging. Specifically, NiuNiu/Moo Community offers the following unique features:

Participant Diversity: The company’s users can interact directly with other users, company executives and analysts within the investing community;

Extensive Content: The company’s content ranges from investing basics to sophisticated analytical guides for professional investors;

Lively and Dynamic Delivery: All the company’s content is designed for digital consumption and delivered through multiple media formats, such as short-form videos, recorded online lessons, chat rooms, live broadcasts and presentation slides; and

Feedback Channel: The company uses NiuNiu/Moo Community as an important source of feedback, which guides the company to continue to optimize the company’s product and service offerings.

As of December 31, 2022, over 1,600 enterprises, including public and private companies, fund houses, exchanges, and media and research institutions, held accounts in the company’s user community. During 2022, on average, the company had an aggregate of approximately 120,000 UGCs (user-generated content) generated on NiuNiu/Moo Community each trading day, which included a multitude of posts, comments and other interactive reactions to social media content. The company continuously finds ways to enhance the quality of content within the company’s ecosystem.

Corporate Services

The company provides value-added corporate services which primarily include IPO distribution, investor relations and marketing and ESOP solution services. The company also provides trust services to corporate clients. As of December 31, 2022, the company had 333 IPO distribution and investor relations clients, as well as 638 ESOP solutions clients. The company has become a long-term partner of many leading new economy companies in China.

Investor Relations and Marketing

The company provides a wide range of investor relations and marketing tools and services to help companies manage their ongoing relationships with shareholders and market their brand. Through creating a corporate account on NiuNiu/Moo Community, the company’s corporate clients can livestream their earnings release and product launch campaigns, post business milestones and advertisements, and interact directly with the company’s users. Therefore, the company’s platform provides a direct channel for the company’s corporate clients to communicate with their existing and prospective investors and increase their brand and product awareness.

The company enters into marketing agreements with its corporate clients, normally on a fixed term basis, and charge fees for promotional events based on negotiated commercial terms, taking into account market fee rates and the services provided. The company provides flexibility to its clients in terms of settlement, allowing them to make payments before or after the relevant event, or in instalments.

ESOP Solution Services

The company provides one-stop ESOP solution services to help its corporate clients with their ESOP administration, including the granting, vesting, exercise and settlement of the stock awards. In addition, the company collaborates with other professional third parties to provide relevant tax planning and withholding services. Under the company’s ESOP solution service agreements, the company provides clients with instruction manuals, maintains and updates the company’s system periodically and backups the company’s clients’ data, and usually charges the company’s clients quarterly based on the level of services they require, together with miscellaneous fees, such as management and system implementation fees. If the customer has other needs, such as training, the company will make a separate quotation and enter into a supplementary agreement with the client for the required service. The service will be delivered after the clients’ payments upon receiving the company’s invoice.

ESOP solution has emerged as a signature corporate service of the company. As of December 31, 2022, the company had 638 ESOP solutions clients.

Trust Services

The company launched its trust services in Hong Kong in March 2021 to provide employee benefit trust and family trust solutions, encompassing company formation, trust establishment and trust management. The company charges one-off trust establishment fees and annual administrative fees for the company’s trust services in accordance with the trust service agreements signed with the company’s clients in Hong Kong.

With the MAS granting the company’s Trust Business License in April 2022, the company officially launched its trust company service offerings in Singapore. The services that the company offers include the set up and administration of family trust, employee benefit trust and family office.

Bridge Loan Services

One of the company’s subsidiaries in Hong Kong, Futu Lending Limited, also holds a money lenders license issued by the licensing court under the Money Lenders Ordinance, which allows it to provide loans to its clients in its ordinary course of business. The company provides limited bridge loan services to the company’s selected clients on a case-by-case basis.

Users and Clients

The company’s users engage Futubull and moomoo by downloading the company’s mobile or desktop applications, or visiting the company’s website, and registering a user account. Users are able to receive market data, technical analysis and other information services and engage in the company’s community free of charge. The number of the company’s users is determined based on the user accounts registered with Futubull and moomoo.

The company’s clients are defined as users who have opened trading accounts with the company, and its paying clients are defined as the company’s clients who have assets in their trading accounts with the company.

The company’s users and clients are also active and loyal. As of December 31, 2022, there were 16.3 million users who were yet to become the company’s clients, representing an important pipeline for the company’s client acquisition.

Corporate Clients

The company’s corporate clients are defined as corporate users to whom the company has provided any of its corporate services. The company’s corporate client base has been expanding since the company started to provide corporate services.

The company’s corporate clients actively contribute to its user community by delivering timely product and business updates to the company’s users, thereby breaking down information asymmetry and providing bases for investment decisions.

User and Client Acquisition

The company grows its client base mainly through word-of-mouth referrals and online and offline marketing and promotional activities.

User and Client Support

The company has developed its proprietary and customized customer service system to connect the company’s users and clients with its customer service staff and technology experts directly through online chat or customer service hotline around the clock. The company’s customer service representatives receive regular training regarding the company’s platform and services, as well as critical communication skills, such as managing client complaints. Users can also post feedback and suggestions on NiuNiu/Moo Community tagging the company’s official accounts, product managers or even the company’s chief executive officer, which the company will strive to respond to promptly.

The company also proactively seeks user and client feedback. For example, the company initiate online communications and activities on major social media platforms and the company’s NiuNiu/Moo Community to seek feedback from its users and clients. The company reaches out to its clients to discuss their experience with the company’s platform and solicit ways in which the company can improve. The company also provides its corporate clients with similar services, where the company has dedicated customer service teams to attend to any issues its corporate clients may encounter, striving to respond as soon as possible. The company’s corporate clients can also reach out to the company anytime and discuss any improvements and changes to the services that the company provides.

Intellectual Property

As of December 31, 2022, the company owned over 100 registered copyrights in China. The company also maintained trademark registrations worldwide, including over 504 in Mainland China, over 163 in Hong Kong, 69 in the United States, 95 in Singapore and over 714 in other countries and regions. As of December 31, 2022, the company had over 180 patents granted in China, 6 patents granted in Hong Kong, 10 patents granted in Singapore and 11 patents granted in Australia. As of December 31, 2022, the company had registered over 100 domain names.

In 2022, the company partnered with Make-A-Wish International, a charity organization that helps fulfill the wishes of children who have been diagnosed with a life-threatening illness.

Ongoing Regulatory Actions

The company is subject to various regulatory requirements, including those specified in laws, regulations and guidelines issued by the competent regulatory authorities in Hong Kong, the U.S., Singapore and Australia, including but not limited to the SFC, MAS, SEC, FINRA and the ASIC.

Futu Securities is a licensed corporation under the Securities and Futures Ordinance (SFO).

Regulation

Futu Securities has been registered as a Mandatory Provident Fund Intermediary with the Mandatory Provident Fund Schemes Authority in Hong Kong since August 2020.

Moomoo Financial Inc. is registered as a broker-dealer with the U.S. Securities and Exchange Commission, or the SEC, and is a member in good standing with the Financial Industry Regulatory Authority (FINRA), authorized to conduct business as an introducing broker in compliance with SEC and FINRA rules.

Futu Clearing Inc. is also registered with the SEC as a broker-dealer and is a member in good standing with FINRA, as well as a member of Depository Trust & Clearing Corporation (DTCC), with the capacity to provide clearing services in the United States.

Moomoo Technologies Inc. operates the international version of the company’s trading platform primarily for the U.S. and Singapore retail investors. Futu Futures Inc. is registered as a futures commission merchant with the Commodity Futures Trading Commission and is a member in good standing with the National Futures Association. Futu Wealth Advisors Inc. is registered with the SEC as a registered investment advisor.

Research and Development

The company’s research and development expenses were HK$1,222.1 million (U.S.$156.6 million) in 2022.

History

Futu Holdings Limited was founded in 2007.