Economic review

Shanghai tightens financial sector supervision

2018-01-12 09:56:00 (Beijing Time)         China Daily

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Shanghai is considering to increase regulatory function to its existing municipal financial service office and is researching possibilities to set up a specialized financial court to better supervise the financial market, said a senior official on Thursday.

Zheng Yang, Party chief of the Shanghai financial work commission and head of the Shanghai municipal financial service office, made the comments at a symposium on improving business-doing environment. "Preventing financial market risks is one of the focuses of our work recently. To work as both a service provider to the financial market and a regulator, we think this move is in alignment with the country's moves to strengthen supervision and prevent risks," he said.

Shanghai is one of China's largest financial markets by market trading volume. In 2017, its trading volume was 1,438 trillion yuan ($220.9 trillion).

About 85 percent of direct financing nationwide came from Shanghai's financial market in 2017, according to the Shanghai municipal financial service office.

The plan to strengthen local supervision of the financial market was first mentioned at a national financial work meeting in July 2017. After the meeting, a handful of provinces and municipalities, such regulatory as Shandong province, set up local administrations for their respective financial markets.

Zheng said strengthening supervision of financial markets in a bid to protect consumers and investors is a part of the city's efforts to improve its business environment.

"We will also strengthen the credit system to protect financial market consumers and investors," he said.

Shanghai has already launched a campaign against fraud and illegal behavior in financial consumer markets, such as internet-based peer-to-peer lending, cash loans to college students, and pay-day loans.

"On the one hand, we are going to strengthen inclusive financing to enhance the accessibility of financing services to a wider group of consumers and enterprises. On the other hand, we will continue to crack down on illegal behavior and fraud," Zheng said.

At the same time, Shanghai will continue to liberalize its financial market to become a more active financial hub.

Shanghai plans to further relax limits on overseas financial institutions to enable more global players to operate there, and to attract more large firms to set up regional headquarters in the city. For example, more overseas financial institutions will be able to hold a 51 percent stake in joint ventures in pilot programs.