What’s new: Nine Chinese regulators tightened restrictions on investment in financial institutions by internet platform companies in a joint opinion issued Wednesday.
In the document, regulators including the National Development and Reform Commission, the State Administration for Market Supervision and the Cyberspace Administration of China urged internet platform companies and the financial institutions controlled and backed by them to strictly implement requirements for capital and leverage ratios. Several people close to internet financial platforms said such requirements are not new. They aim to limit the development scale of internet platforms’ financial businesses and prevent the disorderly expansion of capital, several persons close to the companies said.
The new document calls for improving the regulatory system in the financial sector and ensuring that internet platforms have licenses to conduct any financial business.
The guidelines also reiterate the strengthening of supervision over the payment sector, requiring the delinking of other financial products from their payment services and cracking down on practices known as “picking sides,” in which a platform forces merchants to work exclusively with it and shun competitors.
The background: China has stepped up oversight of an unbridled expansion by tech groups into financial services since late 2020 amid growing concern over potential systemic risks to financial stability and the outsized market power these companies have built.
In April, China’s top financial authorities summoned more than a dozen tech companies, including Ant Group, ByteDance Ltd. and the financial units of Baidu Inc., JD.com Inc. and Meituan, and imposed a raft of stricter compliance requirements on their financial businesses.
Source: Caixin Global