China regulator vows to cut ‘Too big to fail’ risk in innovation


  • Banking
  • Sunday, 15 Nov 2020

Ant’s $35 billion initial public offering earlier this month was halted due to regulatory pressure.

CHINA'S top banking regulator pledged to lower the risk of companies becoming "too big to fail” in financial innovation, suggesting the nation’s biggest technology companies will face increasing scrutiny on their influence in its financial system.

"Financial innovation shouldn’t form oligopolies, reap excessive returns and harm public interests, ” Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission, said at the Caixin Summit in Beijing on Saturday. Companies should not hide behind innovation to break rules of fair competition to benefit themselves, he said.

The comments reinforce the government’s tightening stance on technology companies such as Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Ant Group. Regulatory moves in the past two weeks have included new rules on online lending and regulations aimed to root out monopolistic practices, seeking to curtail the growing power of such companies.

Ant’s $35 billion initial public offering earlier this month was halted due to regulatory pressure.

While new forms of finance such as third-party payment and online lending have increased the amount of financing outside the traditional banking system, they remain within the boundaries of being financial intermediaries, Xiao said.

Although regulators encourage financial innovation which improves efficiency and increases social well-being, and have "always been supportive and tolerant” to the development of fintech, any company -- financial or technology -- that bears the final risks needs to be subject to higher requirements ranging from capital to liquidity and compliance, he said, without elaborating. - Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

   

Did you find this article insightful?

Yes
No

67% readers found this article insightful

Next In Business News

Public Mutual declares RM22m distributions for 6 funds
Airline stocks soaring, but there’s still a long way back
UK's Sunak says public finances won't be fixed overnight
Buffett upbeat on US and Berkshire, buys back stock
China's factory activity expands at a slower pace in February
CPO futures trading to remain range bound next week
Advisory panel unanimously recommends FDA authorize Johnson & Johnson COVID-19 vaccine
GameStop rally fizzles; shares still register 151% weekly gain
NYSE begins move to delist Chinese state oil producer CNOOC
Oil price drops on US$ strength and OPEC+ supply expectations

Stories You'll Enjoy


Vouchers