China mulls rules for Internet finance

BEIJING - China's securities regulator said on Friday that it would work with other agencies to issue a set of rules to govern the burgeoning Internet finance industry.

Despite being "generally supportive" of Internet finance, the China Securities Regulatory Commission (CSRC) said the nascent sector still needs proper regulation and guidance.

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"Internet finance has some unique features and we need targeted regulations," a commission representive told a press conference.

The sector's growth has shaken up the financial community, and the comment comes as media reports suggest the central bank is readying a set of Internet finance rules.

The charge has been led by Jack Ma's e-commerce giant, Alibaba. The company's personal online finance product, Yu'E Bao (Leftover Treasure), has attracted a lot of attention since it was launched last June. Yu'E Bao allows customers to invest any balance on their account in a money market fund. Less than nine months later, at the end of 2013, the scheme had attracted 43 million investors with aggregate deposits of 185 billion yuan ($30.3 billion) making it the the single biggest public fund in China.

The potential of this market has not gone unnoticed by other Internet superstars like Tencent and Baidu. Both are now pushing similar financial products.

Alibaba's latest move to attract investors was an offer of financial products worth 880 million yuan. They were snapped up within three minutes.

While investors are delighted by the new investment choices, analysts advise caution.