Chinese Central Bank Outlines Overall Regulatory Framework for Six Key Forms of Financial Infrastructure

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The People’s Bank of China (PBOC) has released the draft version of new measures that step up the regulation of key financial infrastructure in China.

On 15 December PBOC issued the draft version of the “Administrative Measures for the Implementation of Supervision and Regulation of Financial Infrastructure” (金融基础设施监督管理办法(征求意见稿)) for the solicitation of opinions from the public.

The Measures describe the overall supervisory and regulatory framework for financial infrastructure in China, and mandate the inclusion of six key forms of financial infrastructure including:

1. The financial asset registration and custody system.
2. The clearing and settlement system. 
3. Trading facilities. 
4. Transaction reporting databases.
5. Key payment systems. 
6. The basic credit system.

The Measures prohibit any entities or individuals from establishing or operating any form of financial infrastructure without official approval, as well as prohibit the use of terms that relate or are similar to those for financial services infrastructure, including "finance", "exchange", "exchange centre" "registration and settlement" and "transaction report."

Dong Ximiao (董希淼), a researcher from the Financial Research Institute of Fudan University, said that the Measures are part of efforts by Chinese authorities to ensure that all forms of financial activity in China are fully licensed and regulated. 

"Financial infrastructure holds especial importance for financial markets, and should be subject to stricter regulation of entry and licensed operation," Dong said. 

Dong said that in recent years various parts of China had seen the emergence of unapproved financial infrastructure operators using terms such as "exchange" or "exchange centre", and that they had "disrupted the regular financial order, accumulated considerable financial risk, as well as harmed the property security and lawful rights and interests of the public."