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Balancing Act Needed for Fi-Tech Cooperation

Jan 30-2022   



On its official website, the People’s Bank of China recently released a draft regulation governing the online marketing and sale of financial products. As the draft regulation was in the process of seeking public consultation, Prof. Huang Yiping and Prof. Chen Yan of the NSD made their comments in an article, with the overall message that to manage the cooperation between finance and technology, a balance should be struck between innovation and stability. They are Director and Deputy Director, respectively, of PKU Institute of Digital Finance.

 

The PBOC draft regulation concerned five salient issues of the subject matter, namely illegal marketing of financial products, false and misleading promotions, those trampling public order and morality, lack of appropriate management, and unfair competition. To address these issues, the regulation contained 34 concrete measures.

 

In their article, Prof. Huang and Prof. Shen said that the regulation aimed to safeguard the efficient and stable functioning of the financial market and would provide an important regulatory jigsaw puzzle for regulating platforms’ participation in financial activities. Meanwhile, they proposed that on the condition that risks were under control, the regulatory authorities could leave some leeway for online marketing innovation of financial products and balance the relationship between innovation and stability.

 

More specifically, they made three suggestions with regard to the principles undergirding the regulation. First, the approval system in the draft regulation could be substituted by a filing system to govern the cooperation between financial institutions and Internet platforms. Second, the regulatory authorities could put some fundamental qualification requirements on platforms and set applicability demands on different business types. Third, as the cooperation between financial institutions and Internet platforms constituted a new type of business which contained significant uncertainties with regard to new products and process-related return and risk, ‘regulatory sandbox’ might be a way to manage the challenges so that the institutions could conduct field experiments under the oversight of the regulatory authorities.

Balancing Act Needed for Fi-Tech Cooperation

Jan 30-2022   



On its official website, the People’s Bank of China recently released a draft regulation governing the online marketing and sale of financial products. As the draft regulation was in the process of seeking public consultation, Prof. Huang Yiping and Prof. Chen Yan of the NSD made their comments in an article, with the overall message that to manage the cooperation between finance and technology, a balance should be struck between innovation and stability. They are Director and Deputy Director, respectively, of PKU Institute of Digital Finance.

 

The PBOC draft regulation concerned five salient issues of the subject matter, namely illegal marketing of financial products, false and misleading promotions, those trampling public order and morality, lack of appropriate management, and unfair competition. To address these issues, the regulation contained 34 concrete measures.

 

In their article, Prof. Huang and Prof. Shen said that the regulation aimed to safeguard the efficient and stable functioning of the financial market and would provide an important regulatory jigsaw puzzle for regulating platforms’ participation in financial activities. Meanwhile, they proposed that on the condition that risks were under control, the regulatory authorities could leave some leeway for online marketing innovation of financial products and balance the relationship between innovation and stability.

 

More specifically, they made three suggestions with regard to the principles undergirding the regulation. First, the approval system in the draft regulation could be substituted by a filing system to govern the cooperation between financial institutions and Internet platforms. Second, the regulatory authorities could put some fundamental qualification requirements on platforms and set applicability demands on different business types. Third, as the cooperation between financial institutions and Internet platforms constituted a new type of business which contained significant uncertainties with regard to new products and process-related return and risk, ‘regulatory sandbox’ might be a way to manage the challenges so that the institutions could conduct field experiments under the oversight of the regulatory authorities.