Xiaomi-backed Tiger Brokers is getting itself a US clearing license via acquisition

The acquisition will improve Tiger Brokers profitability.

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Tiger Brokers, an online brokerage platform backed by Xiaomi which allows Chinese-speaking users to buy US and Hong Kong stock shares, said it plans to acquire the US online brokerage service platform Marsco Investment for USD 9.4 million.

UP Fintech, the Nasdaq-listed company behind Tiger Brokers, said its US subsidiary Tiger Fintech will seek to acquire a 100% stake in Marsco with a combination of cash and shares, according to the company’s statement.

Wu Tianhua, the CEO of Tiger Brokers, said the acquisition “brings in rich broker dealer experience in execution and clearing that will further solidify our position as the leading online broker with proprietary technology from front end to back end.”

The acquisition will give Tiger Fintech a so-called self-clearing license in the US, which means it can conduct its clearing business, a process that’s part of payments transactions. The company currently outsources its US clearing business to Interactive Brokers, one of its major shareholders.

Tiger Brokers’ major competitor, Tencent-backed Futu Niuniu, meanwhile, has been granted a clearing license by the US regulators earlier last month.

The acquisition, which is expected to close in the third quarter of 2019, will greatly increase the company’s profitability and improve its operation efficiency, Wu told KrASIA.

Self-clearing will greatly lower Tiger Brokers’ clearing costs and allows it to independently conduct margin financing and securities business, according to Wu.

It’s unclear if the deal between Tiger Brokers and Marsco will be subjected to a national security review by the Committee on Foreign Investment in the United States (CFIUS). The United States is increasingly likely to use a CFIUS review to reject merger and acquisition deals by Chinese companies.

Ant Financial had to terminate a merger deal with MoneyGram and paid out a USD 30 million termination fee to the latter last January for failing to get approval from CFIUS.

Earlier this year, Beijing-based gaming company Kunlun, sole owner of the popular gay dating app Grindr, was ordered to sell its stakes of the app by June next year by CFIUS.