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Image source,Reuters
Just three days before the listing of Chinese fintech company Ant Group, the country’s four major regulatory agencies, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange jointly interviewed company executives, including Ma Yun, the actual controller of Ant Group. , President Jing Xiandong, President Hu Xiaoming, sparked widespread speculation.
Ant Group is expected to be listed in Hong Kong this Thursday (5), and various financial institutions and retail investors are excited to participate. At that time, Ant Group’s total market value may reach a staggering 2.1 trillion yuan ($ 313 billion) and set a new record for the largest initial public offering in history. Therefore, the news that “Ma Yun was interviewed” caused a stir among investors.
The specific content of the interview was not disclosed. However, Ant Group responded that it will further implement the interview views and continue to follow the sixteen character guidelines of “safe innovation, encompass supervision, service entities, openness and win-win” to continue to enhance inclusive service capabilities and promote economic development and people’s livelihoods.
The interview is a system with Chinese characteristics. It refers to the specific administrative actions of the bodies with specific administrative powers to correct and standardize existing problems in the functioning of lower-level bodies through interviews, communication, policies and learning regulations, analysis and comments, etc. For example, in recent years, the Ministry of Ecology and Environmental Protection (formerly the Ministry of Environmental Protection) has repeatedly interviewed local governments due to excessive air pollution, asking them to strengthen governance.
Image source,Reuters
Ma Yun
Predicted by interview
On October 24, at the Bund Finance Summit in Shanghai, Jack Ma said: “We must change the mindset of the financial pawn shop. For the moment, we must use the ability to use technology and a credit-based system. big data to replace the pawn shop. ” Thought. This credit system is not based on information technology and the known society, but on the basis of big data. Only in this way can credit be equal to wealth. “
What he called “pawn shop thinking” means that traditional financial services require collateral to issue loans, while digital finance uses big data to make credit scores and issue loans directly. Matthias criticized traditional finance as “pawn thinking” and “hurt a lot of entrepreneurs.”
Jack Ma also criticized the “Basel Accord” as a club for older people. The deal refers to an international banking arrangement that requires a certain ratio of capital to risk-weighted total assets of banks in various countries to reduce credit risk.
Reuters commented that the heated comments showed the contradiction between traditional financial supervision and modern financial innovation, and presented a test on how China strikes a balance between financial innovation and supervision, and how to avoid “big failing.” Of financial institutions have a practical meaning.
Ma Yun’s criticism drew a response from Chinese regulators.
A week after his speech, the China State Council Financial Stability and Development Committee held a special meeting, noting that “At present, the rapid development of financial technology and financial innovation must handle the relationship between financial development , financial stability and financial security … It is necessary to strengthen supervision and comprehensive financial activities Include supervision to prevent risks effectively “.
On the same day, the media run by the People’s Bank of China reprinted an article by an academic who said that some large technology companies did not require prudential supervision at the beginning of their establishment, but later absorbed public deposits in disguise. The deposit and loan business similar to banks requires prudential supervision.
On Monday morning (November 2), the China Banking and Insurance Regulatory Commission held a party committee meeting (enlarged) to reiterate that financial activities will be fully incorporated into supervision in accordance with the law, and that similar companies and entities will be treated equally.
On the evening of the same day, when it was revealed that Jack Ma was interviewed, the China Banking and Insurance Regulatory Commission and the Central Bank jointly issued the “Provisional Measures for the Management of Small Loans Online (Draft for Comments)”.
This measure imposes strict restrictions on the leverage ratio used by companies that make small loans online. For example, financing through non-standard forms must not exceed 1 times net assets and financing through standard forms must not exceed 4 times; for example, in In a single joint loan, the equity contribution ratio of small loan companies conducting small loan business online will not be less than 30%.
Currently, the two Ant subsidiaries conducting the “Huabei” and “Baibei” business do not meet this requirement. Following implementation of the measures, Ants will replenish capital or scale down credit under regulatory pressure to ensure regulatory compliance.
Reuters commented that, in Jack Ma’s opinion, the essence of finance is credit management. It is impossible to support the financial needs of the world’s development in the next 30 years if you continue to use pawn shop thinking today. But in the eyes of financial professionals, more people feel the potential financial risks.
“In the age of big data, when financial innovation measures continue, how to balance risk prevention and support innovation is a topic that needs urgent research.”
Image source,Reuters
opportunity
Public opinion is concerned about the timing of the supervisor’s interview with Jack Ma. Ant Group is expected to be listed in Hong Kong this Thursday (5), and its market value may reach 2.1 trillion yuan, setting a new record for the largest IPO in history.
Retail investor enthusiasm for Ant Group is unprecedented. The total purchase amount of retail investors in Shanghai and Hong Kong has reached a record $ 3 trillion, which is comparable to the UK GDP in one year.
In Shanghai, the scale of retail subscriptions for Ant Group shares reached US $ 2.8 trillion. However, according to local regulations, retail subscriptions do not involve prepayment and you only need to pay for the purchase on time after winning the lottery.
However, in Hong Kong, subscriptions must pay a deposit. Higher deposits lead to a higher success rate. Therefore, many retail investors pay off excess deposits through loans from financial institutions and then repay the unused deposits and interest after signing. This time, 1.55 million retail investors participated in the underwriting. Hong Kong media reported that about half of Hong Kong retail investor demand for the IPO came from margin loans.
Shanghai and Hong Kong’s enthusiasm for listing on Ant has also heightened attention to the “regulatory interview” incident. However, Ant Group’s listing prospectus has repeatedly emphasized risk factors, including oversight.
