MNI POLICY: Overseas Financial Firms Must Obtain China License

     BEIJING (MNI) - Foreign financial service providers aiming at the Chinese

market should set up subsidiaries and obtain licenses in China, and not attempt

to serve the market via digital platforms, an official from China's top foreign

exchange regulator said Wednesday.

     "China is currently not ready to open its online sector to foreign

financial companies," said Sun Tianqi, chief accountant of the State

Administration of Foreign Exchange (SAFE) in a speech at the Annual Conference

of Financial Street Forum 2019 on Wednesday.

     The comments come despite WTO regional bilateral agreements paying greater

attention to the opening up of online cross-border financial services as fintech

advances gather pace.

     Sun said China's legal system, regulatory capacity and coordinating

mechanisms are not yet ready to cope with financial chaos coming from an opening

of the online sector, adding that the China market is also immature and

investors have limited investment experience to discriminate against online

fraud.

     Sun accepted that China must eventually follow international trends and

open cross-border online transactions, but regulators needed to license foreign

operators.

     "Financial service providers must be licensed, and licenses must have

national boundaries," Sun emphasized.

     Sun noted that there are numerous online illegal activities in the

financial services sector, including forex and stock trading platforms, with

SAFE cracking down on about 1,000 websites which enabled FX margin trading in

China since 2017.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$]