The stars seem to be aligning for Nasdaq's partnership with Futu Securities, the largest China-based online brokerage firm. The U.S. stock market's eight-year bull run, a cloudy outlook for China's economy and the rise of its tech-savvy middle class have all converged, resulting in lots of upward growth for the five-year-old Futu, which offers mainland Chinese investors access to U.S. equity markets.
Unlike a traditional broker, Futu is entirely web-based; users trade and invest via desktop or mobile apps. Futu, which has raised about $70 million in two rounds of funding and is currently seeking a third, has about 3.4 million app users and 200,000 trading accounts since its inception in 2012. The firm has grown its business by 500 percent each year.
"There are a lot of stocks that emerged during the bull market and there are a lot of stocks that Chinese investors are familiar with, such as Apple, Alibaba, and other Chinese ADRs," said Futu Securities' founder and chairman, Li Hua, who launched the company after working at Chinese internet giant Tencent, which today owns more than 20 percent of Futu. "But [Chinese investors] have limited access to real-time U.S. stock market pricing and it can discourage them from investing in the U.S. market."