Reuters will order cybersecurity reviews for some companies looking for foreign listings in China
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Brenda Goh and Scott Murdoch
SHANGHAI / HONG KONG (Reuters) – China said on Tuesday that it would put in place new rules to strengthen its oversight of plans to list or use algorithms abroad in a move to tighten Beijing’s strength in its broad technology sector. .
The Chinese Cyberspace Administration () said that from February 15, platform companies with data of more than one million users will set new rules for security review before listing their shares abroad.
From March 1, it will also establish rules governing the use of algorithm recommendation technology, it said in a separate note.
Both sets of rules were proposed last year and are expected to affect a large set of companies, such as TikTok owner ByteDance, an e-commerce giant. Alibaba (NYSE 🙂 The team and many more smaller players.
The CAC move has been the subject of a number of regulatory changes in China over the past year that have dampened the desire to list companies abroad, but bankers hope the new rules will provide more certainty in 2022.
In Hong Kong, it fell 0.36% on Tuesday and the city’s technology index lost 1.44%.
Shares of Hong Kong Exchanges and Clearing Ltd, the Hong Kong stock exchange operator, were down 1.9% from a recent low of 2.4% after the announcement.
“If this is not a retrospective, then it would only affect listed candidates and not already listed companies. That said, companies in this latest camp already have a lot on their minds,” said Justin Tang, head of Asian research for United First investment advisor. Singapore partners.
The CAC changes come a week after China’s state planner applied for regulatory approval https://www.reuters.com/world/china/china-tightens-scrutiny-offshore-listings-sectors-off-limits-foreign-investment- 2021 -12-27 For China’s foreign lists of sensitive sectors, it is part of Beijing’s efforts to establish a new framework for the study of maritime lists.
In particular, the China Securities and Exchange Commission (CSRC) proposed tightening the rules on December 24 https://www.reuters.com/markets/europe/china-securities-regulator-says-vie-compliant-companies-can-list- overseas- 2021-12-21 regulates Chinese companies listed abroad, requesting the submission of agencies as soon as possible, according to a system that involves close coordination between various regulatory bodies.
CAC proposed cybersecurity reviews for the first time in July https://www.reuters.com/world/china/china-widens-clampdown-overseas-listings-with-pre-ipo-review-firms-with-large-2021-07 – 10, saying that foreign governments would focus on the risks of influencing, controlling, or manipulating data on foreign lists.
New rules governing the use of algorithmic recommendation technology, first proposed at https://www.reuters.com/technology/china-issues-draft-guidelines-internet-recommendation-algorithms-2021-08-27 last year. companies are demanding that users be allowed to turn off the service, and that they will also increase the oversight of news providers who use this technology.
Chinese cyberspace regulators are imposing stricter restrictions on data collection and data storage. Authorities are also pushing for companies to be included in the internal list.
Two other new sets of rules, the Data Security Act and the Personal Data Protection Act, which include data storage and data privacy, respectively, came into force last year.
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