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China hints more fintech regulation to come

China hints more fintech regulation to come

Some of China's largest fintech companies may face more regulation following comments made by the top banking regulator.

Speaking at the Singapore Fintech Festival, Guo Shuqing, chairman of the China Banking Regulaory Commission (CBRC), warned that "timely and targeted measures" may be needed to prevent "new systematic risks".

The regulator also picked out big tech firms, saying that he will watch over "too big to fail" cases in the sector.

While the speech did not name any companies by name, the likes of AliBaba and TenCent have built enormous client bases through their messaginhg and social media apps and then have added financial services to their offerings in recent years.

"Some big techs operate cross-sector business with financial and technology activities under one roof," said the CBRC chairman. "It is necessary to closely follow the spillover of those complicated risks and take timely and targeted measures to prevent new systematic risks."

Guo highlighted a number of areas of interest to the CBRC including data ownership, cybersecurity, micro-lending and anti-competitive behaviour. 

"Fintech is a winner-take-all industry," he said. "With the advantage of data monopoly, big tech firms tend to hinder fair competition and seek excessive profits."

So far this year China's legislature  has passed a Civil Code designed to protect individual consumers' data which is due to come into force next year.

Meanwhile the State Administration for Market Regulation released draft rules in November that defined for the first time, what constitutes anti-competitive behavior.

Also in November, Chinese regulators decided to halt the planned initial public offering of Jack Ma's Ant Group which had been poised to be the biggest IPO on record and was forecast to net more than $34 billion from interested investors. 

Guo's speech did promise that any regulatory action would be designed to prevent big tech firms blocking smaller newcomers and ensuring innovation while preventing any systemic risks.

“Facing the rapid growth of fintech, we will adopt a positive and prudent approach. We will encourage innovation while enhancing risk control, so as to address to new problems and challenges,” Guo said.

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