Fintech giant Ant Group's initial publicoffering on the STAR Market will be suspended, the Shanghai Stock Exchangeannounced on November 3 night.

The Shanghai bourse explained that AntGroup has reported major matters, such as the change in supervision environmentconcerning fintech, due to which Ant Group may not be able to meet listingrequirements at the bourse or meet related information disclosure requirements.

Based on the stock exchange's regulationsand sponsors' opinions, Ant Group's IPO on the STAR Market will be postponed.The fintech company and its sponsors are required to make relevantannouncements.

Ant Group, which also filed for a duallisting on the Hong Kong Stock Exchange, announced on November 3 it willsuspend the listing on the Hong Kong bourse.

Ant Group, which filed in late August tofloat on the Shanghai Stock Exchange STAR Market, is poised to raise $34.4billion in a record IPO, surpassing Saudi Aramco's $29.4 billion listing lastyear.

Ant Group is estimated to be valued atabout $315 billion, based on public filings. Its debut on the two exchanges wasscheduled for Nov 5.

China's securities regulator backs thesuspension

China's top securities watchdog noted onNovember 4 it bolstered the Shanghai Stock Exchange's move to hit the pausebutton on a "hasty" IPO of Ant Group.

"This is to protect the lawful rightsand interests of investors, to ensure transparent, accurate informationdisclosure, as well as to uphold the fairness and justice in the market,"the China Securities Regulatory Commission said in a statement.

Changes in fintech industry regulationshave a "huge impact" on Ant Group's operational structure and profitmodel, the regulatory body said, adding it is poised to work with the Hong KongStock Exchange, where Ant was also due to list shares before the IPO waspulled.

"It is a responsible approach toinvestors and the market to halt Ant Group's hasty IPO in the event of majorchanges in the regulatory policy environment and conforms to the market rulesand the rule of law," the regulator added.

Ye Lin, a professor at the Law School underRenmin University of China, pointed to the fact that regulatory talks are arelatively minor supervision measure indicating no major violations. AntGroup's changing business activities along with the financial regulatoryenvironment may be the main cause for the halting of its listing.

Shanghai Stock Exchange said in a later officialstatement that the decision to halt Ant Group's initial public offering is madeby the issuer and lead underwriter based on actual conditions, adding that it"respects and supports this decision and will work with relevant partiesto assist in the return of subscription funds".

Shanghai Stock Exchange agreed that theabove decision is a responsible behavior for the market and investors "inthe case of regulatory talk with financial regulators before Ant Group'slisting, as well as recent changes in the financial technology regulatoryenvironment that may significantly impact Ant Group's business structure andprofit model".

After the suspension of thisissuance,Shanghai Stock Exchange vowed that it "will prudently handle thesubsequent stock issuance and listing of Ant Group in accordance with laws andregulations".

Ant should take a relook at small loanbusiness

Ant Group's loan business should betterserve the society and facilitate inclusive finance, according to analysts.

Financial regulators' decision of delayingthe Chinese fintech giant's $34.4 billion IPOs is a warning for fintechcompanies to reconsider their small loan business, as it relates to benefits ofa large group of Chinese people. And a base line is to ensure that lending willnot result in excessive debt burden on borrowers, analysts said.

Wei Shangjin, a professor of Finance andEconomics at Columbia University, said Ant's personal loan business can helphouseholds better manage temporary income or expenditure shocks, say forillness or education.

"One concern is that greateravailability of such loans could result in financially unsophisticated peopletaking on too much debt, or otherwise exacerbating their 'behavioral biases',thereby creating greater financial instability," said Wei, who is alsoformer chief economist of Asian Development Bank.

Wei suggested that more research andevaluations in this area thus would help to ensure that Ant – and fintechinnovation in general – can progress in ways that are good, not just forfinancial investors, but for society at large.

"Most of the social benefits stemmingfrom Ant's expansion come as a by-product of the company's profit-seekingactivities. This is not a bad thing as it makes them sustainable," headded.

The suspension followed a meeting ofChina's top financial regulators with Jack Ma, the founder of Ant Group, andtwo other executives.

China's top financial regulators, includingthe People's Bank of China, the China Banking and Insurance RegulatoryCommission, the China Securities Regulatory Commission and the StateAdministration of Foreign Exchange, conducted a joint regulatory talk withAlibaba's top management on November 2.

Alibaba founder Jack Ma, Ant Group'schairman Eric Jing and the fintech company's CEO, Simon Hu, attended themeeting. Further details were not provided.

Ant Group IPO suspension signals strongerfintech regulation

The Shanghai and Hong Kong stock exchangessuspended the $34.4 billion IPO of fintech giant Ant Group, signaling thatChina will further strengthen fintech regulation.

Due to major events, including the meetingand changes in fintech regulatory environment, Ant Group may be disqualifiedfrom listing or may not comply with information disclosure requirements, theShanghai stock exchange said in a statement on November 3.

Online small lending generated a large partof Ant Group's profits, which may no longer be so huge in the future, as Chinawill impose tighter regulations on online small lending offered by microloancompanies.

The China Banking and Insurance RegulatoryCommission, along with the People's Bank of China, the central bank, said onNovember 2 it has started soliciting public opinion on interim measures onadministration of online small lending, with the aim of preventing risks,ensuring the legitimate interests of customers, and promoting healthydevelopment of such business.

One of the key points of the draft rules isthat microloan companies that are authorized to conduct online small lendingbusiness are required to provide at least 30 percent of loan funds for eachonline small loan they offer jointly with partner banks.

This will force microloan companies to cutdown their high financial leverages, said Zeng Gang, deputy director-general ofthe National Institution for Finance and Development.

As of June 30, Ant Group's consumer andsmall and micro businesses credit balances reached 2.15 trillion yuan ($321billion). Approximately 98 percent of the credit balances enabled through itsplatform were underwritten by its partner financial institutions orsecuritized, said the group in an application proof filed with the Hong Kongbourse.

Under the new rules, however, the twomicroloan companies of Ant Group will need to replenish capital or reduce theamount of credit, experts said.

China postponed Ant's listing to betterprotect the interests of financial consumers and investors and sustain soundcapital market development in the long run.

According to relevant rules on theregistration-based IPO system, a company planning a listing is required to takeconcrete action to improve transparency in terms of information disclosure,said an opinion piece published by the Economic Daily news app on November 3.