Chinese Central Bank Unveils Anti-Trust Measures Permitting Break up of Third-Party Payments Platforms

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The People’s Bank of China (PBOC) will have the power to recommend the dismantling of third party payments platforms under new measures to combat trust and monopoly conduct in the Chinese payments sector.

On 20 January PBOC issued the draft version of the “Non-Bank Payments Organisation Regulations” (非银行支付机构条例(征求意见稿)) for the solicitation of opinions from the public.

Under the Regulations PBOC will be able to “recommend to the State Council’s anti-trust enforcement bodies measures including the dismantling of non-bank payments organisations to stop conduct that abuses market allocation status.”

Dong Ximiao (董希淼), chief researcher with Merchants Union Finance, said to state-owned media that the draft regulations provide detailed rules with regard to anti-trust enforcement measures.

“They are the concrete expression of the Central Economic Work Conference’s spirit of ‘strengthening anti-trust and preventing the disorderly expansion of capital,’ and will help to strengthen anti-trust systems in the payments services market and maintain a fair and competitive market order,” said Dong.

The draft regulations also seek to standardise investigatory rights and procedures for PBOC, and stipulate that payments organisations must register with PBOC for filing when accepting equity collateral, undertaking “innovative operations,” or in the case of any other material changes.

Under the draft regulations PBOC may issue a warning and recommend the adoption of measures including “regulatory discussions” under the following circumstances:

  • A non-bank payments organisation has a one-third share of the non-bank payments services market,
  • Two non-bank payments organisations have a combined share of one half of the non-bank payments services market,
  • Three non-bank payments organisations have a combined share of three-fifths of the non-bank payments services market.

The release of the draft regulations arrives just after the launch of multiple measures to rein in China’s fintech giants, chief amongst them Jack Ma’s Ant Group, who were summoned for regulatory discussions at the end of December.

On 10 November China unveiled the draft version of a new anti-monopoly law that targets the immense economic power of the country’s incumbent tech giants. 

The State Administration for Market Regulation (SAMR) said the the law was for the purpose of “preventing and restraining monopolistic conduct in the platform economies sphere, and strengthening and improving anti-monopolistic regulation of platform economies.”

Shortly afterwards on 15 November Xiao Yuanqi (肖远企), chief risk officer at the China Banking and Insurance Regulatory Commission (CBIRC) said that financial innovations will not be allowed to “lead to the formation of oligopolies, obtain excessive returns, or harm the interests of the public.”

In December Guo Shuqing, PBOC party secretary and head of CBIRC, warned of new forms of “too big to fail” risk in the fintech sector, pointing in particular to “a small number of tech companies who occupy a dominant position on the small-sum payments market, affect the interests of a large section of the population and possess key financial infrastructure.”

Beijing subsequently launched an anti-trust investigation into Jack Ma’s e-commerce giant Alibaba at the end of December, as well as summoned executives from fintech-affiliate Ant Group for “regulatory discussions.”

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