Chinese version of fintech "supervision sandbox" debuts in Beijing, head of the central bank's business management department: will not be included in virtual currency and other institutions

"Finance" reporter Zhang Yingxin

Source: Financial Network

Editor's Note: The original title was "China Edition of the Fintech" Supervision Sandbox "Premiere in Beijing: Licensed Admission is the Bottom Line"

Relevant person in charge said that it must be a licensed financial institution to enter, and it does not exclude the entry of projects launched by Fintech companies in cooperation with the licensed institution. In addition, some 46 Fintech pilot projects approved by Beijing may enter Beijing's "regulatory sandbox"

"Effectively grasp the implementation in the spirit of nailing nails, and work out a blueprint." This is the "FinTech Development Plan (2019-2021)" (hereinafter referred to as "Planning") released by the People's Bank of China in August this year In the sentence mentioned. According to the "blueprint", some regions have gradually promoted fintech supervision.

Now, fintech regulation has finally taken a substantive step: the Chinese version of the fintech "regulation sandbox" has officially appeared.

On December 5, the People's Bank of China announced on its official website that it supports the first pilot pilot of financial technology innovation in Beijing. On the same day, the Beijing Municipal Bureau of Local Financial Supervision (hereinafter referred to as the “Beijing Financial Bureau”) responded that it would explore building a prudent and inclusive Chinese version of the “regulation sandbox”.

In recent years, in the global wave of fintech development, China's fintech industry has risen with lightning. However, while helping the traditional financial industry to improve quality and efficiency, its potential risks have gradually emerged. On the one hand, fintech institutions expect relevant regulations to give enough room for innovation; on the other hand, the regulators also strive to find a balance between technological innovation and risk prevention and control.

In this context, the Chinese version of the fintech “regulation sandbox” emerged.

What are the main types of companies included in the Chinese version of the fintech "regulation sandbox"? Previously, some people believed that the possibility of including online loan, virtual currency and other institutions was not ruled out. On December 7, at the "Beijing Financial Technology Innovation Media Exchange Conference", the relevant person in charge of the Business Management Department of the People's Bank of China (hereinafter referred to as the "Management Department of the Central Bank") told the Caijing reporter that it must be a licensed financial institution to enter This is the bottom line and will not be included in online loan, virtual currency and other institutions. At the same time, it does not rule out the entry of projects launched by Fintech companies in cooperation with licensed institutions. In addition, the 46 fintech pilot projects approved in Beijing may enter Beijing's “regulatory sandbox” in the future.

The market is also concerned about whether the Chinese version of the fintech “regulation sandbox” will use the practice paths of other countries as a reference? "The official website of the central bank does not directly say 'regulatory sandbox', but rather 'financial technology innovation pilots', mainly because there are relevant considerations. Currently, we are all licensed institutions. This is our biggest feature. It is related to the UK, Singapore, etc. The "regulatory sandbox" introduced is not the same. "The person in charge of the above-mentioned central bank's business management department told Caijing reporter.

Photography / Financial Reporter Zhang Yingxin

Beijing "show" financial technology "family"

According to the news released by the central bank on December 15, in order to implement the Plan, the People's Bank of China actively constructs the basic rules system for financial technology supervision, explores the use of flexible management methods such as information disclosure, product disclosure, and social supervision, and strives to create an inclusive and prudent financial technology Innovate supervision tools, and strive to improve the professionalism, uniformity and penetration of financial supervision.

At the same time, in accordance with the "State Council's Reply on the Comprehensive Pilot Work Plan to Promote the Opening-up of Beijing's Service Industry", support the pioneering pilot of fintech innovation supervision in Beijing, and explore the establishment of fintech innovation supervision in line with China's national conditions and in line with international standards. Tools to guide licensed financial institutions on the premise of compliance with laws and regulations and protection of consumer rights, using modern information technology to empower finance to improve quality and efficiency, and to create a sound, secure, inclusive, and open financial technology innovation and development environment.

In recent years, Beijing has successively issued "Guiding Opinions on the Innovation and Development of Capital's Fintech" and "Beijing's Plan for Promoting Fintech Development (2018-2022)". The latter summarizes Beijing's financial technology development pattern as: "one district, one core, and multiple points of support."

Specific areas include: District 1: Beijing Fintech and Professional Service Innovation Demonstration Zone; Core 1 District: Beijing FinTech and Professional Service Innovation Demonstration Zone; Multiple Points: Fintech Bottom Technology Innovation Cluster, Banking Insurance Technology Cluster, FinTech Security industry cluster, wealth management industry cluster. Some practitioners in the fintech industry have bluntly stated that the plan released by Beijing reveals its ambitions in the field of fintech.

Why did the fintech innovation supervision pilot land in Beijing? Zeng Zhicheng, deputy director of the Central Bank's Business Management Department, bluntly stated that Beijing has unique resource advantages in developing the financial technology industry. On the one hand, Beijing is a national science and technology innovation center, which has obvious advantages in terms of science and technology talents, innovation investment, and innovation subjects; The financial management center, complete financial system and huge market space provide rich application scenarios and a good regulatory environment for the development of Beijing financial technology.

Yin Yong, member of the Standing Committee of the Beijing Municipal Committee and deputy mayor, used the set of data to "show" Beijing's strength at the first "Chengfang Fintech Forum": Beijing currently has more than 700 licensed financial legal institutions and total financial assets It accounts for 45% of the country's total; Beijing's R & D investment accounts for close to 6% of the regional GDP, which is more than three times the national average; in addition, the number of newly registered innovative companies in Beijing today is More than 200 companies, such as technology and unicorns, rank second in the world.

Specific to the level of financial technology development, how is Beijing performing? The 26th edition of the Global Financial Centers Index compiled by the British think tank Z / Yen Group and the China (Shenzhen) Comprehensive Development Research Institute shows that Beijing ranks first among the world's top ten fintech centers.

At the same time, the latest progress of Beijing's fintech application pilot work also reflects its fintech development to a certain extent.

On October 12 this year, the People's Bank of China and other six ministries and commissions formally approved the launch of a pilot project for fintech applications in Beijing. According to a reporter from Caijing, the Beijing area was finally approved by 46 ministries and commissions for 46 fintech pilot projects, involving 77 participating financial institutions and technology companies.

In December 2018, the People's Bank of China and other six ministries and commissions jointly issued the "Notice on the Pilot Work of Fintech Application", and decided to settle in Beijing, Shanghai, Jiangsu Province, Zhejiang Province, Fujian Province, Shandong Province, Guangdong Province, Chongqing City, Sichuan and Shaanxi provinces (10 provinces and cities) organized pilot work on fintech applications.

The relevant person in charge of the Central Bank's Business Management Department said that the Beijing Fintech Application Pilot Project approved by the six national ministries and commissions can be summarized in the words "multiple, precise, broad, new".

Specifically, “multi” refers to the large number of pilot projects. There are 46 pilot projects in Beijing this time, ranking first among the ten pilot provinces and cities in the country; “fine” means that the pilot units are all elites in the financial technology field. , Involving government departments, public institutions, commercial banks, Internet giants, etc .; "Guang" refers to a wide range of application scenarios of pilot projects, involving finance, medical care, social security, pensions, agriculture, rural areas, agriculture, rural areas, and other fields, including face payment, electronics Pilot projects such as social security cards and e-health cards; "new" refers to the pilot projects representing the latest achievements of cutting-edge technologies in financial technology such as big data, cloud computing, artificial intelligence, and blockchain.

Based on the fintech application pilot project, the Chinese version of the "regulatory sandbox" is coming.

In July of this year, Li Wei, the director of the Science and Technology Department of the Central Bank, bluntly mentioned the pilot of financial technology applications in 10 provinces and cities.

"We also hope that through this pilot, we will be able to establish a policy and measure that is suitable for the development of a fintech system. Regarding how fintech will develop, we will consider possible risks at the beginning of the plan, and establish a mechanism for compensation and withdrawal of risks. That is to explore a regulatory sandbox that fits China's national conditions. "

A Preliminary Study of China's Fintech "Regulation Sandbox"

After the central bank identified Beijing as the "first stop" for fintech innovation supervision pilots, the Beijing Financial Bureau also made a statement through its official website:

"Beijing has taken the lead in launching a pilot for fintech innovation supervision in the country and exploring the construction of a prudent and inclusive Chinese version of the 'regulation sandbox'."

This is not the first "regulation sandbox" mentioned by the Beijing Financial Bureau. In November this year, Huo Xuewen, the director of the Beijing Financial Bureau, mentioned in the "Beijing Fintech Forum 2019" the "Bayi Project" measures for developing fintech in Beijing, that is, a fintech development plan, a support policy system, and a fintech and Professional service innovation demonstration zone, a fintech industry alliance, a fintech research institute, an innovation testing mechanism (commonly known as the “regulatory sandbox”), an international brand forum, and a group of top fintech companies and industry leaders.

In less than a month, the Chinese version of the "regulatory sandbox" was officially unveiled. How should we understand the "regulatory sandbox"?

Huo Xuewen interpreted it as "a cage for fintech innovation in the system." It believes that we have had many innovations in the past, either crossing the border, exceeding regulatory constraints, or being abused in the process of innovation, forming a lot of unnecessary risks brought by fintech innovation, that is, risk spillovers. The purpose of piloting fintech innovation supervision is to put fintech innovation in the cage of the system, the "supervision sandbox."

"Specifically, it is necessary to have a bottom line for innovation, to open up the boundaries of innovation, and to achieve innovation results." Huo Xuewen further analyzed and pointed out that first of all, there must be strict bottom line constraints; secondly, innovation can be released on the boundary that keeps the bottom line, and innovation can be installed Enter the cage of the system, that is, to carry out innovation experiments according to certain rules. If it is unsuccessful in the end, it will stop or withdraw. Furthermore, the innovation achievements will be achieved. After staying in the sandbox for a while, fintech innovation will succeed if it succeeds. The results of fintech innovation.

The relevant person in charge of the Business Management Department of the Central Bank pointed out that the pilot work of fintech innovation supervision needs to adhere to four principles: First, adhere to the basic principle of technology neutrality, and do not pre-empt the financial application of any technology, and do not give preference to all new technologies. Fair and equitable market participation opportunities; secondly, to abide by basic business rules as an important prerequisite, pay attention to clarify the essence of financial business under the appearance of technological innovation through penetrating supervision and other methods, and ensure that fintech innovation does not break through existing business rules or deviate from The correct development direction; Furthermore, the main task is to prevent financial risks, formulate targeted supervision measures, and use information technology to improve the professionalism and timeliness of financial supervision. Finally, with the core concept of service industry development, adhere to the "residence supervision" Service, development through supervision ", focusing on the applicability of supervision and emphasizing the inclusiveness of supervision.

In accordance with the above thinking, what types of institutions will be included in the Chinese version of the fintech "regulation sandbox"? Both the central bank and the Beijing Financial Bureau emphasized in their official website news that they should guide licensed financial institutions, and the market has the view that the possibility of including online lending institutions and virtual currencies is not excluded.

"Finance" reporters verified this issue with the relevant persons in charge of the Central Bank's Business Management Department and the Beijing Financial Bureau. Both parties stated that they are currently emphasizing the entry of licensed financial institutions. This is the bottom line and will not be included in online lending, virtual currencies and other institutions. According to a reporter from Caijing, there will not be many first batch of institutions entering the "regulation sandbox" in Beijing. The 46 fintech pilot projects approved in the aforementioned Beijing area may enter the "regulation sandbox" in Beijing in the future. .

However, it should be noted that emphasizing the entry of licensed institutions does not mean that "finance technology companies" are "closed out." "It does not rule out the entry of projects launched by some FinTech companies in cooperation with licensed institutions, such cases are found in 46 FinTech pilot projects," said the head of the central bank's business management department.

At the same time, according to people familiar with the matter, the working procedures, content and organizational structure of Beijing's "supervisory sandbox" have now been formulated and will be announced after reaching a consensus with the People's Bank of China.

Mentioned the Chinese version of the "regulation sandbox" which mainly refers to the sandbox supervision methods of the countries. The relevant person in charge of the central bank's business management department told Caijing reporter,

"Why the central bank's official website does not directly say" regulatory sandbox ", but" financial technology innovation pilots ", mainly because there are relevant considerations. Currently, all of them have entered into licensees. This is our biggest feature. It's not the same as the 'regulatory sandbox'. "

According to public information, the concept of "regulatory sandbox" was first proposed by the British government in 2015. According to the definition of the Financial Conduct Authority (FCA) in the UK, the “regulatory sandbox” is a “safe space” in which fintech companies can test their innovative financial products and services without encountering problems. Immediately subject to regulatory rules. But the regulatory sandbox also emphasizes the protection of financial consumers' rights. Following the practice in the United Kingdom, the United States, Singapore, Australia and other countries have also begun to explore their own sandbox regulatory models.

Obviously, as far as the current situation is concerned, the Chinese version of the “regulation sandbox” exploration still has a long way to go. In an interview with Caijing, a deputy secretary general of the Beijing Internet Society, Che Ning bluntly, he can explore the problem-solving ideas from four aspects: First, improve the legislation. For example, the supervision sandbox can only relieve corporate administrative legal responsibilities, civil and criminal legal responsibilities. It cannot be involved. For enterprise-related behaviors, there may be three types of legal liabilities: civil, administrative, and criminal. However, the power basis of the supervision sandbox—financial supervision is only an administrative power, and the supervisory authority can waive the administrative legal responsibility created or executed by it, but it is caused by general civil disputes between enterprises and consumers, or by corporate crimes. Criminal liability is beyond its power boundary and cannot be waived.

The second is to fight for support. Most of the regulatory sandboxes are initiated locally. If the central regulatory oversight is not available, the value of the regulatory sandbox will not be reflected. Furthermore, the gap must be closed and financial innovation must be in the regulatory sandbox. At the end of the day, we need perfect support. The practice of sandbox supervision is not a general responsibility exemption and a general license, but more similar to case counseling. When an enterprise enters the sandbox in the form of a certain type of product, Regulators need a dedicated team for follow-up and coaching. Only by achieving these four points is a real regulatory sandbox.