CSRC urged to fast-track regulations for Internet finance

China's top securities watchdog has been required by the State Council to fast-track the mapping out of rules and regulations for the country's promising Internet finance, as some companies in the sector have shown signs of operational risk, which might threaten the sector's overall healthy development, said a government official on Thursday.

Wang Ou, deputy director with the innovative business supervision department of the China Securities Regulatory Commission (CSRC), said that the authorities led by the People's Bank of China are working on guidelines for the development of Internet finance, which is expected to be rolled out soon.

The regulation of the trading platforms, the investors' qualifications, and information security will be their main focuses, Wang noted in a speech during the three-day World Internet Conference held in Wuzhen, East China's Zhejiang Province.

Infrastructure for Internet finance, such as a credit rating system and the securitization of assets need to be built up soon with the help of the government, Cao Tong, head of Tencent Holdings' private bank in Shenzhen's Qianhai special economic zone, said during the conference.

Despite the requirement of the regulation, Wang believes that Internet finance, born with the introduction of Alibaba's third-party payment arm Alipay in 2003, is generally a good thing and has developed well.

Internet finance, which features low threshold, high transparency and low financing costs, can improve the financial liquidity in China, link micro-credit lenders with borrowers and push forward the country's capital market development, Gregory Gibb, president of Shanghai Lujiazui International Financial Asset Exchange Co, also said Thursday during the conference.

He noted that financial liquidity is not good in China, where two-thirds of the country's total $200 trillion yuan ($32.57 trillion) assets are non-financial assets.

As financial services offered by Internet companies - such as Internet fund products and peer-to-peer credit models - are eroding the banks' deposit holdings, it seems that banks have already sensed the necessity of embracing Internet finance and industrial convergence, analysts said.

Against such a backdrop, China Guangfa Bank in late September signed a strategic deal with Internet behemoth Baidu Inc to co-explore the Internet financial industry.