China tightened control of online financing, saying it is looking to develop healthy industry growth amid criticism the platforms contributed to an equities plunge that wiped US$3 trillion off the market.
All client funds must be parked at established banks and Internet finance firms would need approval from financial as well as cyberspace regulators, the People’s Bank of China said in a statement on its Web site on Saturday.
They must also provide sufficient disclosure and send risk reminders to customers.
China’s online lenders helped fuel an equity roller coaster that saw the benchmark index rallying more than 150 percent in the 12 months through June 12 before abruptly crashing.
The sites offered 3.1 billion yuan (US$499.2 million) of new loans for stock investment in May, about six times that of January, according to the Yingcan Group (盈燦公司), which tracks the nation’s more than 2,000 peer-to-peer finance platforms.
“This is a move by the government to tighten regulation of the industry, particularly for smaller companies,” Yingcan chief executive officer Xu Hongwei (徐紅偉) said. “We’re waiting to see the details expected later this year, such as the minimum required capital for entry.”
The People’s Bank of China (PBOC) is to supervise online payments while the China Banking Regulatory Commission is to oversee online lending, trust and consumer finance.
The China Securities Regulatory Commission (CSRC) is to handle equity crowd-funding and online fund sales, while insurance is to be looked after by the China Insurance Regulatory Commission.
Peer-to-peer Web sites which match borrowers with lenders, should serve only as intermediaries and are banned from “enhancing borrower credit worthiness” or raising funds illegally, according to the new rules. Online crowd-funding must not “mislead or cheat investors.”
The PBOC added that Internet finance activities were bringing new problems and risks as there were “no market entrance thresholds, no game rules and no regulatory oversight.”
It plans to set up an Internet finance association and also support financial institutions starting online businesses including in banking, insurance and securities-related offerings.
The rules were drafted by 10 Chinese regulators and ministries, including the Ministry of Public Security and the Cyberspace Administration of China. It is the first set aimed at taming Internet finance at a time of rising risk.
Yingcan estimates that 1,500 of the platforms might go bankrupt or have difficulty paying dues, up from 275 last year, while Dagong Global Credit Rating Co (大公國際) has put more than 1,300 peer-to-peer companies on a blacklist that flags them as too risky and opaque.
The CSRC last weekend said it would stop online lenders from handing out new loans for share purchases, blaming some “information technology service providers” for illegal practices that it said contributed to the stock plunge.
There are to be additional strings on Internet finance firms, such as a minimum capital base and parking of reserve funds with regulators, Peking University Finance and Industry Development Research Center secretary-general Huang Song (黃嵩) said.
“Putting so many regulators in charge of each section of online finance is an old approach,” Huang said. “The government is trying to use a conventional approach to regulate this most unconventional business. Instead of encouraging the new online firms, they are just pushing existing financial institutions to embrace the Internet.”
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
Demand for artificial intelligence (AI) chips should spur growth for the semiconductor industry over the next few years, the CEO of a major supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said, dismissing concerns that investors had misjudged the pace and extent of spending on AI. While the global chip market has grown about 8 percent annually over the past 20 years, AI semiconductors should grow at a much higher rate going forward, Scientech Corp (辛耘) chief executive officer Hsu Ming-chi (許明琪) told Bloomberg Television. “This booming of the AI industry has just begun,” Hsu said. “For the most prominent
PARTNERSHIPS: TSMC said it has been working with multiple memorychip makers for more than two years to provide a full spectrum of solutions to address AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it has been collaborating with multiple memorychip makers in high-bandwidth memory (HBM) used in artificial intelligence (AI) applications for more than two years, refuting South Korean media report's about an unprecedented partnership with Samsung Electronics Co. As Samsung is competing with TSMC for a bigger foundry business, any cooperation between the two technology heavyweights would catch the eyes of investors and experts in the semiconductor industry. “We have been working with memory partners, including Micron, Samsung Memory and SK Hynix, on HBM solutions for more than two years, aiming to advance 3D integrated circuit
RSS