The Choice Of Chinese Fin Tech Supervision Model

With the advancement of technology and the development of financial industry,the combination of technology and finance has deepened,and Fin Tech appeared.The Financial Stability Board(FSB)defines Fin Tech as: promoting financial innovation through technological means,forming business models,technology applications,processes and products that have a major impact on financial markets,institutions and financial services.Two keywords can be extracted from it,namely ‘innovation' and‘impact'.Technology gives innovation,which makes things different,to the financial industry.However,what deserves our attention more are what the impact of Fin Tech is,how the various countries respond to the impact of Fin Tech,and what should be done in the future.This article focuses on the regulatory sandbox.By comparing and analyzing the regulatory model of the countries with advanced Fin Tech,the paper is intended to illustrate that the regulatory concept has changed in the face of the impact and challenges of Fin Tech.After the emergence of the regulatory sandbox in UK,it has been widely used by other countries and regions,and an effective balance between encouraging innovations and controlling risks is emerging.By analyzing the status quo of Chinese financial supervision,it is found that the regulatory sandbox can make up for the shortcomings of current supervision and has other advantages.Our country does have the need to learn from the regulatory sandbox.Based on the practical2 experience of regulatory sandbox in various places and the actual situation in China,we will further explore the feasible path of establishing the regulatory sandbox in China.This article is organized in four chapters.The first chapter of this paper explores the international development status of the Fin Tech supervision model,which is divided into three sections.The first section clarifies the dual attributes of Fin Tech and paves the way for the latter.Due to the diversified technology of the Fin Tech,the application scenarios in the financial business field are very extensive,and the advantages in reducing financial transaction costs and improving financial efficiency are obvious.However,Fintech magnifies the traditional financial risks while it has technical risks and poses a challenge to financial supervision.The second section discusses that in order to achieve a balance between encouraging innovations and controlling risks,UK,US and China have made active attempts in regulatory response and formed their own models.The UK's regulatory sandbox is an ‘experimental' regulatory model,which has specific purpose,tolerates errors,adjusts rules and has flexibility.FCA defines the regulatory sandbox as a ‘safe space' in which companies can test innovative products,services,business models and delivery mechanisms without immediately bearing the regulatory consequences of normal testing activities.The US approach is to adopt functional supervision on the one hand,to integrate Fin Tech into its existing regulatory system according to its business;on the other hand,it has introduced systems and policies to encourage Fin Tech innovation.Chinese ‘passive' supervision only take actions after the risks have erupted,which damage the interests of the consumers.The third section shows that although the Fin Tech supervision models of UK,US and China are different,they all reflect the moderate tolerance of Fin Tech.The second chapter of this paper begins an in-depth study of the regulatory sandbox system.The first section deconstructs the regulatory sandbox by analyzing the composition and process of the regulatory sandbox.The core of the regulatory sandbox system is to loosen the regulatory rules and test financial products and services to a limited extent.It mainly consists of two parts: the sandbox supervisor and the sandbox test subject.The sandbox supervisor is a financial regulatory agency3 that adjusts the regulatory rules in the regulatory sandbox and is responsible for the supervision of the entire testing process.The sandbox test subject is the subject of supervision in the regulatory sandbox,including sandbox test entities,sandbox test consumers,and sandbox test products.The process of regulatory sandbox is well-designed.From the beginning to the end of the sandbox test,the regulatory concept of encouraging Fin Tech innovation and preventing systemic risks has not been absent.The operational process of the sandbox is generally divided into three phases: sandbox access,sandbox operation,and sandbox exit.The second section examines the regulatory sandbox practices in the UK,Singapore,Australia,Hong Kong and Taiwan,respectively,through the number of tests,test duration,test entities,business types and test schedules.Through the comparison of the design of the regulatory sandbox in various places,it is found that the scope of authority of the sandbox supervisor determines the scope of test entities;the sandbox test product must have certain innovation;the adjustment of the regulatory rules cannot exceed the scope of authority of the supervisor;and consumer protection is necessary.In the third chapter of this paper,based on the full understanding of the content and practice of the regulatory sandbox,China has the necessity to introduce regulatory sandbox.The first section starts from the status quo of Chinese financial supervision,and its limitations are difficult to meet the needs of the sustainable development of Fin Tech.First of all,the existing legal rules in China lag behind financial innovation.Second,traditional institutional supervision model is difficult to cope with the mixed operation of Fin Tech in our country.Finally,there is regulatory uncertainty in Chinese ‘passive' supervision,so that innovative companies tend to lose their development direction.The second section starts from the regulatory sandbox,and its advantages are conducive to make up for the shortcomings in Chinese financial supervision.The important role of regulatory sandbox is to adjust the regulatory rules that may hinder the development of Fin Tech in a specific scope,and to supervise financial innovative products or services before they enter the market.In addition,the regulatory sandbox can better protect the interests of consumers while encouraging the development of Fin Tech,and form a benign regulatory interaction.In4 the third section,by comparing the regulatory sandbox with Chinese financial reform pilots,it is found that although the operational logic of them is consistent,Chinese financial reform pilot has limitations in terms of region,content and authorization.The fundamental reason is that the marketization of financial reform pilots is limited.In summary,China does have the necessity to learn from the regulatory sandbox.The fourth chapter combines the existing practice of the regulatory sandbox and the actual situation in China,and analyzes the feasible path of establishing Chinese regulatory sandbox from the perspective of the sandbox supervision subject,the sandbox test subject and the sandbox test process.In terms of the sandbox supervision subject,China should adopt PBOC,CSRC,and CBIR as the sandbox supervision subject,and at the same time play the coordination role of the Fin Tech Committee.Since Chinese financial regulatory agencies do not have the power to adjust the regulatory rules,it is necessary to authorize PBOC,CSRC,and CBIR through legislation.In terms of the sandbox test subject,it involves three things.First,at the beginning of the establishment of Chinese regulatory sandbox,the sandbox test entity can mainly be licensed financial institutions,and gradually extend to non-licensed entities as the system continues to be improved.Second,the sandbox test consumers should be qualified,with their right to know,right to claim compensation and information security being protected emphatically.Third,establish the sandbox test product evaluation standards.It should belong to the financial industry and intend to enter the local market after the test.It also should be innovative,beneficial,and have the necessity to attend the test.In terms of the sandbox test process,it includes the sandbox access,the sandbox operation,and the sandbox exit.The sandbox access requires the sandbox supervisor to review whether the applicant is eligible,whether the test product is suitable,the reasonableness and feasibility of the test arrangement,and the adequacy of the test preparation.The scale of the test products involved in the operation of the sandbox,the number of test consumers,and the test period are all differentiated.The sandbox supervision subject applies the adjusted regulation rules to implement supervision.The test entity's behavior during the test period shall not exceed the scope of the exemption or authorization,and the test entity must be strictlyobserved for the unrelaxed regulatory rules.The exit of the regulatory sandbox mainly considers the reasons for exit and the consequences of exit.The specific exit steps and exit arrangements can be negotiated in the test plan and differentiated for different test products.