Cen­tral­ized com­mer­cial pa­per trad­ing plat­form opens in Shang­hai

China Daily (Hong Kong) - - BUSINESS - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

China launched a na­tion­wide plat­form for cen­tral­ized com­mer­cial pa­per trad­ing on Thurs­day in Shang­hai, a move to en­hance trans­parency, ef­fi­ciency and reg­u­la­tory stan­dards in the fast-ex­pand­ing mar­ket.

Shang­hai Com­mer­cial Pa­per Ex­change Corp Ltd, ini­ti­ated and su­per­vised by the Peo­ple’s Bank of China, the cen­tral bank, adds to ex­ist­ing fi­nan­cial in­fra­struc­ture that serves in­creas­ing mar­ket de­mand, said Pan Gong­sheng, deputy gover­nor of the cen­tral bank.

Fi­nan­cial mar­ket in­fra­struc­ture is crit­i­cal to se­cure the safe and ef­fi­cient op­er­a­tion of the mar­ket. Com­pared with that of other sub­di­vi­sions, in­fra­struc­ture in the com­mer­cial pa­per mar­ket in China rel­a­tively lagged be­hind, which af­fected the ef­fi­ciency of re­source al­lo­ca­tion and hin­dered the moni- tor­ing and pre­ven­tion of risks, said Pan.

“A na­tion­wide, cen­tral­ized com­mer­cial pa­per ex­change plat­form will help the mar­ket be­come bet­ter reg­u­lated, mar­ket-ori­ented and pro­fes­sional, which makes the mar­ket more con­sol­i­dated, and gives it greater ac­ces­si­bil­ity and trans­parency,” he said.

Pan added that com­mer­cial pa­per trad­ing plat­forms which were not ap­proved by the State Coun­cil and fi­nan­cial reg­u­la­tory au­thor­i­ties are per­cent op­er­at­ing con­trary to a govern­ment cir­cu­lar on com­mer­cial pa­per trad­ing re­leased in 2011. These frag­mented, unau­tho­rized trad­ing ex­changes pose risks to the en­tire fi­nan­cial sys­tem, he said.

China’s com­mer­cial pa­per mar­ket has been ex­pand­ing rapidly in re­cent years, as com­mer­cial pa­per trad­ing has been used as a ma­jor al­ter­na­tive short-term fi­nanc­ing tool among small and medi­um­sized en­ter­prises, which ac­count for 27 per­cent of the to­tal credit bal­ance of en­ter­prises’ short-term fi­nanc­ing, ac­cord­ing to the cen­tral bank.

Un­reg­u­lated trad­ing has in­creased the risk of fraud as some firms use forged pa­pers, or use the same pa­per to get guar­an­teed fi­nanc­ing from lenders in var­i­ous cities, tak- ing ad­van­tage of loop­holes in the poorly con­nected com­mer­cial pa­per in­for­ma­tion sys­tem.

This frag­mented mar­ket, which lacks ef­fi­ciency and trans­parency, has re­sulted in bill-fi­nanc­ing scan­dals in­volv­ing tens of bil­lions of yuan, re­ported Shang­hai Se­cu­ri­ties News.

“A cen­tral­ized com­mer­cial pa­per ex­change will not just make the mar­ket more trans­par­ent and ef­fi­cient. It can also use all par­tic­i­pants’ be­hav­ior records to form a big data anal­y­sis sys­tem to help rate the qual­ity of their credit, which will help lower credit risks and costs,” said Zhao Cila, an an­a­lyst at CITIC Bank’s Shang­hai branch.

Yi Huiman, chair­man of the board of di­rec­tors of the In­dus­trial and Com­mer­cial Bank of China, said the launch of the Shang­hai ex­change marks solid progress in China’s fi­nan­cial mar­ket in push­ing for­ward dig­i­tal­ized trans­ac­tions.

pro­por­tion of com­mer­cial pa­per trad­ing in to­tal short-term fi­nanc­ing for SMEs

ZHAO GE / XIN­HUA

Mao Jun, a Xin­jiang Gold­wind Science & Tech­nol­ogy Co tech­ni­cian, checks a tur­bine at a wind farm in Urumqi, the Xin­jiang Uygur au­ton­o­mous re­gion.

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