Ightening Regulations on Internet Finance Platforms with the Establishment of the “exit Guide”

Tightening regulations on Internet Finance Platforms with the establishment of the “Exit Guide”

According to the “2017 September China Peer-to-Peer Lending Industry Report”, in September, there is a 1% and a 3.63% decrease of the number of P2P platforms and the total volume respectively. However, the number of platforms which has a total volume over 1bn has increased by 17%. This does not comply with the previous regulation that focus on such focal platforms, which aims to reduce the substandard transactions and maintains the current transaction volume.

Meanwhile, the new issued “Exit Guide” regulates existing P2P platforms to protect their customers and lenders. The Guide complies those withdrawing companies from relocating their office and shutting down the platforms whilst their senior managers should be available for contact. The formation of a withdrawal group is needed for communication with related association and the lender. They should announce the reason, plan and timetable of their withdrawal, the resolution of capital to their lenders and a channel for complaints and negotiations.

Until the end of this September, there was a decrease of 0.61% of residual volume over 1m. With the establishment of the Regulations and the Exit Guide, there is an expectation of continuous increasing of companies’ withdrawals from the P2P market.

Meanwhile, there are several listed companies that may also be affect by the regulation and the guide, such as Ping An Insurance, Panda Financial Holding Corporation Limited from financial industry. While there are some companies from manufacturing or even medical industry, such as Homa appliance Co., Ltd and Da An Gene Co., Ltd.