All kinds of local financial formats are planned to be included in the unified regulatory framework, and the industry: responsibility sinks, anti-kicking ball

Beijing News Shell Financial News (reporter Cheng Weimiao) On December 31, the central bank issued the "Regulations on Local Financial Supervision and Management (Draft for Solicitation of Comments)", which requires that in accordance with the principle of "unified rules of the central government, local implementation of supervision, who approves, who supervises, who is responsible", all kinds of local financial formats will be included in the unified regulatory framework, and local financial risk prevention and resolution and disposal will be strengthened. Bi Yanguang, a senior observer of the financial industry, analyzed that before the local government also had its own financial regulatory regulations, the draft opinion unified the requirements from the national level, and at the same time the responsibility sank to the locality, and also prevented the relevant departments from "kicking the ball" when disputes occurred.

The draft opinions consist of five chapters and 40 articles, including the definition of local financial organizations, local regulatory responsibilities, regulatory coordination mechanisms, and cross-regional collaboration. The "local financial organizations" referred to in the Draft Opinions refer to microfinance companies, financing guarantee companies, regional equity markets, pawn shops, etc. established in accordance with law.

"In the types of financial business, such as consumer finance companies are regulated by bancassurance and futures by certificates, these are clear. However, like some local exchanges, financial or quasi-financial services are also carried out, which are approved by local governments, and the corresponding regulatory responsibilities are not clear enough. Bi Yanguang said.

The reporter recently received a similar problem in an investment dispute, investors in the local exchange to buy "spot" products are suspected of similar futures trading, and then in a number of regulatory departments to complain fruitlessly. Lawyers who have undertaken similar cases told reporters that many local securities regulatory bureaus will not directly conclude that the exchange is completely futures trading, but only make a recommendation of a certainty.

This is just a microcosm. In the drafting notes of the draft opinion draft, the central bank said that in recent years, the rapid development of local financial formats has played an important role in serving the real economy and financing of small and medium-sized enterprises in the region. However, the internal control mechanism of some institutions is not perfect, the development positioning is biased, there are certain risks and hidden dangers, and a small number of institutions operate in violation of laws and regulations or even engage in illegal financial activities, which increases regional financial risks.

"Since 2017, all provinces, autonomous regions and municipalities directly under the Central Government have established local financial supervision and administration bureaus to strengthen the supervision of local financial organizations and achieve obvious results. However, in the daily supervision and risk disposal, due to the lack of unified local financial supervision legislation at the national level, the understanding of the division of responsibilities of local financial supervision is not consistent among all parties, some institutions and activities are outside the financial supervision, and the local financial supervision and management departments are also facing problems such as insufficient regulatory basis and insufficient law enforcement means. The central bank said.

As a result, the central bank has taken the lead in drafting the draft opinion since June 2018, clarifying the local financial regulatory rules and the basis of the higher-level law, unifying regulatory standards, and building a local financial regulatory framework with clear powers and responsibilities and strong law enforcement.

This draft comment puts forward a variety of requirements. The first is to clarify the responsibilities of local financial supervision and control and strengthen the coordination and cooperation between the central and local governments; the second is to clarify the definition and supervision rules of local financial organizations, emphasize the licensed operation of local financial organizations, and require local financial organizations not to carry out business across provinces in principle; the third is to give local financial supervision and management departments the means to perform their duties and increase the punishment for violations of laws and regulations; the fourth is to clarify the types of business that local trading venues and other four types of institutions must not carry out; the fifth is to clarify the principles of monitoring, identification, and disposal of illegal financial activities; and the sixth is to set up transitional arrangements to ensure a smooth transition.

Beijing News shell financial reporter Cheng Weimiao Editor Song Yuting Proofreader Guo Li