China and Australia to cooperate on fintech

The China Securities Regulatory Commission (CSRC) and Australian Securities and Investments Commission (ASIC) announced they have entered into an agreement to promote innovation in financial services in their respective markets.

According to the ASIC, the Information Sharing Co-operation Agreement further underlines the significance of the broader Australia-China trade and investment relationship. China is Australia's largest two-way trading partner in goods and services (valued at $155.2 billion in 2016, up 3.7 per cent on the previous year). China is also Australia's largest export market ($93 billion in 2016) and our largest source of imports ($62.1 billion in 2016).

China is a world leader in financial technology (fintech) investment, development and adoption, particularly in customer-facing areas like payments and lending. In 2016, total investment in Chinese fintech ventures is estimated to have been US$10 billion (approximately A$13 billion - source). As a further indication of the size of the market, digital payments transacted in China made up almost half the total global volume - source.

Signing the Agreement, ASIC Chairman Greg Medcraft said, "Co-operation between regulators is essential to realise the benefits of the technological revolution. Understanding new developments and their impact in overseas markets helps us to remain proactive and forward-looking in our domestic approach. This Agreement represents an exciting opportunity for us to learn more about the Chinese fintech sector, which is renowned for its success and dynamism. We also look forward to sharing our insights and experiences on regtech with the CSRC."

Shiyu Liu, CSRC Chairman said, '\"In the past few years, the rapid development of fintech has created ample opportunities to introduce new financial services, enhance financial inclusion and fulfill investors' needs. However, financial market regulators around the globe also face new requirements and challenges posed by market innovations. The Agreement between CSRC and ASIC will provide an effective channel for timely exchange of information on fintech developments and regulatory issues, and enhance regulatory cooperation between the two authorities.''

The Agreement provides a framework for information sharing between the two regulators on emerging market trends and developments, as well as regulatory developments pertaining to innovation in financial services. This will enable the CSRC and ASIC to keep abreast of fintech activity in each other's jurisdictions, and help to inform domestic regulatory approaches in the context of a rapidly changing global financial environment.

In recognition of the importance of regulators keeping pace with the fintech industry, the Agreement also specifically provides that the CSRC and ASIC will collaborate through sharing information on regulatory technology trials.
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