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Latest Insight

Chinese Regulators Inch Towards ICOs

Written by Thomas Yan || July 13 2017

While no official steps have yet been taken, the People’s Bank of China (PBOC) in Beijing has raised the possibility of a regulatory sandbox environment for future ICOs as the government works through its options for potential regulations, focusing on providing a legal framework for Initial Coin Offerings in China (ICOs) moving forward. In addition, options such as investor education, project review, and increased information disclosure have been mentioned as targets for a new framework. The PBOC’s previous emphasis on Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols are also expected to continue with ICO regulations. Other potential regulatory possibilities include requiring companies to have a working product before their ICO, requiring more information disclosure including risk and investor assessments, and reducing speculative investments.

Why Asia matters for ICOs

Written by Tom Yan || July 10 2017

In the second of our ICO series, we look at the role that Asia plays in Initial Coin Offerings.

As China's FinTech industry, led by Tencent and Alibaba, has exploded in recent years, regulators have been watching the industry’s growth carefully, in order to manage risk and protect consumers while still encouraging growth and innovation. In May 2017, The People’s Bank of China (PBOC), the country’s central bank and main regulator, announced the creation of a FinTech committee under the PBOC’s Technology Department to research the impact of the sector on financial markets and China’s monetary policy. In addition, the committee will also act as a coordinating body for the PBOC, as well as research and promote the implementation of regulatory technology (RegTech).

Qupital LogoThere is a large financing gap in the Hong Kong market, particularly for SMEs who have become increasingly frustrated with the lack of available financing. Thus, it was not a shock when Alibaba – the Chinese e-commerce conglomerate – invested $2 million into Qupital, a Hong Kong based online platform that allows mainly SMEs raise finance against their receivables by connecting them with professional investors and family offices.

There is a big blank space on individual credit scoring in China. The national individual credit reporting system was founded in 2005 by the Credit Reference Center, a part of the People's Bank of China (PBOC). But at the end of 2015, only 870 million individuals were included in the database, and only 370 million people’ credit history was in the system, covering just 26% of the whole population. On Jan 5th 2015, the Chinese government authorized 8 companies to prepare their own personal credit scoring platforms. One of them, Sesame Credit, is owned by Ant Finance and is the largest platform, but remains unlicensed.

Yu’E Bao, the world’s largest money-market fund, may have to limit its individual investment amount at RMB500,000 (USD$72464), which is half of the amount the limit is now. The implications aren't for certain at this point, but it could mean the end of the platform's growth in the future. 

A press announcement on April 10th 2017 showed that Tencent, a Chinese online giant, led an investment in India’s electronic commerce company Flipkart, alongside eBay and Microsoft. The total amount was $1.4 billion and Tencent contributed $700 million, eBay $500 million and Microsoft $200 million. This was the first investment for Tencent into India’s e-commerce market. But the question remains, will it be a good move for the company?

On the last day of March 2017, Wang’lian (Internet Payment Union) started its trial operation after one year of preparation. The first group of companies that have joined the platform include: Wechat Pay, China Merchants Bank, Bank of China, and Chinabank Payment. The platform will effectively cut the 3rd party payment networks of Ant Financial and Tencent, and is likely the most important payment industry development this year, and it may not bode well for China's dominant digital payment companies. 

Last week, at The Fifth Session of the twelfth National People's Congress in China, Mr. Zhou Xiaochuan, the chief governor of People’s Bank of China (PBOC), encouraged the development of Fintech during the press conference among all topics about finance reform and development in China.

Will China's Panda bonds make lunch of Dim Sum Bonds in 2017?

Written by Anton Marusenko || March 09 2017

In the last year, Panda bonds (the name of mainland RMB denominated bonds from a non-domestic issuer) have become increasingly competitive and attractive for investors. What explains the increased usage of inland bonds in contrast to slightly diminishing performance of the Dim Sum (RMB denominated bond issued abroad)? How do we define the current interrelationship of the two. And what is in store for the future of the Chinese bond market?

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