Ant Group’s record $34bn IPO suspended
Ant Group’s record-breaking IPO has been suspended in both Hong Kong and Shanghai, just days before trading was due to open in a colossal dual listing.
Chinese regulators called senior Ant executives, including controller Jack Ma, to a meeting on Monday, during which it was made clear the fintech giant would be subject to greater governmental oversight.
In a statement on Tuesday, the Shanghai stock exchange said: “Your company has also reported significant issues such as the changes in financial technology regulatory environment. These issues may result in your company not meeting the conditions for listing or meeting the information disclosure requirements.”
Chinese regulation tightens
Sources for the FT believe the decision to block Ant’s floatation would likely have been signed off by the Chinese president Xi Jingping. A spokesperson for the nation’s foreign ministry, Wang Wenbin, said the suspension is intended to preserve the stability of the markets and “protect investors’ interests”.
That statement gels with new regulations proposed by China’s central bank, The People’s Bank of China, and the China Banking and Insurance Regulatory Commission. On Monday the institutions drafted new rules on microlending that could curb the profits and growth of fintechs in the region.
The introduction of further compliance costs, or restrictions on the size of loans suggested in the draft could impact digital lenders, particularly startups and smaller entities that would be unable to soak up new fees. It would also hamper the flow of credit to areas of the Chinese economy that need it most to bounce back from the COVID-19 pandemic as SMEs struggle to access loans from banks and traditional channels.
The IPO was poised to raise more than $34bn in what would have been a world-record market debut. Ant set the price of its shares last week in a dual listing on Shanghai’s Star Market for Rmb68.80 ($10.26), and in Hong Kong for HK$80 ($10.32) a piece.
The stall sent waves across the market which saw Alibaba, which owns around a third of Ant Group and whose technology underpins its payments system, fall 9% in US trading on Tuesday.
Trading in Ant Group shares was set to open on Friday 6 November
BIS and MAS publish blueprint for cross-border payment idea
The Bank for International Settlements and the Monetary Authority of Singapore (MAS) has published a proposed blueprint for the multilateral linking of domestic real-time payment systems across borders.
The blueprint, titled Project Nexus, outlines how countries can fully integrate their retail payment systems onto a single cross-border network, allowing customers to make cross-border transfers instantly and securely via their mobile phones or internet devices.
The Nexus blueprint was developed through consultation with multiple central banks and financial institutions across the globe. It builds on the bilateral linkage between Singapore's PayNow and Thailand's PromptPay, launched in April 2021, and benefits from the experience of the National Payments Corporation of India's (NPCI) development and operation of the Unified Payments Interface (UPI) system.
The Nexus blueprint comprises two main elements:
- Nexus Gateways, to be developed and implemented by the operators of participating countries' national payment systems, will serve to coordinate compliance, foreign exchange conversion, message translation and the sequencing of payments among all participants. These gateways will be predicated on a common set of technical standards, functionalities and operational guidelines set out within the proposal.
- An overarching Nexus Scheme that sets out the governance framework and rulebook for participating retail payment systems, banks and payment service providers to coordinate and effect cross-border payments through the network.
“To achieve significant cost-reduction in cross-border payment transfers, enhancements must be made on two fronts: direct connectivity between domestic faster payment systems, and frictionless foreign exchange on shared common wholesale settlement infrastructures. The BIS Innovation Hub Singapore Centre is working on both. The Nexus project maps out a much-needed set of standards to achieve seamless cross-border payment systems connectivity.” said Sopnendu Mohanty, Chief FinTech Officer, MAS.
How do cross-border payments work?
Cross-border payments are currency transactions between people or businesses that are in different countries. The sender will choose a front-end provider, such as a bank or a money transfer operator (e.g. Transferwise), to initiate the payment. The receiver then receives the payment via the medium specified by the sender. Traditionally, cross-border payments flow via the correspondent banking network (CBN) which most front-end providers use to settle the payment. But, in recent years, new back-end networks emerged to optimise cross-border payments and enable interoperability between payment methods and provide senders with more possibilities to reach the receiver.
The increased international mobility of goods, services, capital, and people have contributed to the growing economic importance of cross-border payments. The value of cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years.