Terminate Local Financial Asset Trading – Municipal Government of Beijing

InvestInChina – The municipal government of Beijing has taken steps to terminate local financial asset transactions, aligning with a nationwide trend to clear out regional financial exchanges that have faced issues of irregularity and regulatory concern.

Beijing Financial Assets Exchange Ceases Operations

On July 31, the Beijing Financial Assets Exchange (BFAX), overseen by the Beijing Municipal Government, announced its decision to discontinue operations in general exchange business, encompassing the transfer of non-listed state-owned equity and distressed assets. The exchange will wind down existing projects within a set deadline, and no new activities will be accepted post-announcement.

For ongoing projects at BFAX that have not yet found a buyer, the exchange will halt information disclosure and trading processes effective August 30, 17:30. Projects with bidders identified before the announcement, or those with bidders emerging after, must conclude or terminate their in-exchange transactions by the same deadline, finalizing procedures such as fund transfers and transaction documentation issuance. BFAX will assist members in terminating and wrapping up in-exchange projects.

Compliance with regulatory directives dictates that BFAX will formally end service provision for these businesses as of August 30, 17:30, shutting down relevant system access. Any unresolved issues post-closure will not be facilitated by the exchange.

Nationwide Crackdown on Financial Exchanges

Over recent years, there has been a systematic shutdown of financial exchanges across China, driven by the municipal and provincial governments’ efforts to address operational irregularities and the proliferation of pseudo-exchanges masquerading as legitimate platforms. These pseudo-exchanges disrupted financial markets by illicitly offering registration, trading, and settlement services for financial assets.

In December 2021, the China Securities Regulatory Commission (CSRC) directed provincial governments to conduct on-site inspections of local financial exchanges in collaboration with the People’s Bank of China, China Banking and Insurance Regulatory Commission, and CSRC branches. The directive prohibited the establishment of new financial exchanges and advocated consolidation based on the principle of “one province, one exchange” for regions with multiple entities.

Since March, provinces and municipalities including Hunan, Liaoning, Chongqing, Shaanxi, Fujian, Shenzhen, Shandong, Jilin, Jiangxi, Qingdao, Guangdong, Tianjin, Shanxi, Heilongjiang, Hainan, Henan, Xiamen, and Ningbo have all announced cancellations of their financial exchanges’ business licenses.

This coordinated action by local governments reflects a broader regulatory push to clean up and standardize the financial asset trading landscape, eliminating risks and ensuring adherence to national financial regulations.