No giving all your broker’s data to China? Jack Ma shoots himself in the foot

Last month, FinanceFeeds warned of the perils of allowing gigantic Chinese upstart ANT Group to enter a very unusual IPO on the Shanghai Stock Exchange, valued at a tremendous $34 billion, and how this, led by Alibaba internet monopolist Jack Ma and of course by default the Chinese Government, would unleash Chinese domination across the free market world, and give the government all of your brokerage’s intellectual property.

Fortunately for Western businesses, China’s illiberal and totalitarian approach to business works both ways, not just in favor of the Chinese magnates that fuel it.

ANT Group, owned by Jack Ma himself, is a Chinese financial technology company whose remit is to create the infrastructure and platform to support the digital transformation of the service industry, whilst seeking to enable all consumers and small businesses to have equal access to financial and other services that are inclusive, green and sustainable, had finalized its IPO value last week, constituting a world record value.

the price for the Hong Kong part of the listing is expected to revealed later in the week ahead of the listing early next month. “This was the first time such a big listing, the largest in human history, was priced outside New York City,” Mr Ma said at the Bund Summit. “We wouldn’t have dared to think about it five years, or even three years ago.”

Back in July this year, FinanceFeeds reported the company’s initial wish to go publicly listed, a very rare thing for a Chinese firm, and an important point as this addresses the transparency issue usually associated with doing any form of business with companies behind a communist iron curtain, and demonstrates the firm’s monopolistic aspirations in global markets.

At that time, Eric Jing, Executive Chairman of ANT Group, said “The innovative measures implemented by SSE STAR market and the SEHK have opened the doors for global investors to access leading edge technology companies from the most dynamic economies in the world and for those companies to have greater access to the capital markets. We are thrilled to have the opportunity to play a part in this development.”

“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators. Through our commitment to serving the under-served, we make it possible for the whole of society to share our growth,” Mr Jing added.

If it is so difficult for Western fintech firms to gain dominance and become bigger than banks, how is it so easy for this upstart to simply come in and take over?

It is highly likely that in the future, we will all be using ANT for various components of electronic trading, be that reporting, back office, client interaction and connectivity to service providers.

AWS already has done this by sidling up to regulators so that all regulatory reports have to be submitted via Amazon’s AWS cloud solution, thus if a broker takes regulatory reporting services from a specialist regulatory technology firm, reporting to regulators will by default be done via AWS. A clever move, however the battle between Amazon and Alibaba, both odious entities in my opinion, is hot to the point where Mr Ma will want total control.

The question is, do you want your company’s data owned and stored by a firm which is owned largely by the Chinese government, despite its huge IPO figure?

Well, now it may not be much of a concern, because Mr Ma opened his mouth, and opening one’s mouth in China is not usually the best idea, as it usually results in the government slamming it shut, and unlike in many other nations, untold personal wealth or seniority of position does not stop them doing so.

The Chinese Stock Exchange, owned of course by the state, took umbrage just a day after Mr Ma was summoned to a meeting of the country’s top regulatory bodies. This followed a critical speech by Ma in Shanghai, where he criticised the country’s fluid regulatory system and banks, accusing the latter of having a “pawn-shop mentality”.

In a short statement, the Shanghai Exchange said it was suspending the share offering due to upcoming changes in the regulatory environment that might make Ant fall short of listing requirements concerning information disclosure.

Shares in Ant Group were set to start trading in China and Hong Kong on Thursday, with the much anticipated float set to be the world’s biggest, after investors signed up for $37bn of shares.

Within an hour of the news breaking, the Hong Kong Stock Exchange announced that it would also suspend Ant’s IPO, citing the same regulatory concerns and effectively derailing the upcoming listing.

With any luck, the Chinese authorities and Shanghai Stock Exchange will stick to their guns, your data will remain safe, and a publicly listed monster run across the entire world by megalomaniac Mr Ma alongside an equally megalomaniac communist super-government won’t go around acquiring all of the other fintech firms that underpin the component structure of the FX industry worldwide which would mop up all data and intellectual property of the entire global capital markets business.

Yes, we in the FX industry have seen the hostile approach toward overseas business proffered by the Chinese government when attracting large IBs and brokers in China was a big thing among western brokerages and platform vendors, however it is reassuring to know that their kneejerk totalitarianism sometimes goes in our favor.