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London launch for crowdfunding index

By CECILY LIU | China Daily | Updated: 2017-04-12 17:43

China and the UK unveiled plans for the world's first crowdfunding index in London on Tuesday, marking efforts to systematize data for the rapidly expanding sector. The index is being jointly developed by the Chengdu-based big data company BBD, the Academy of Internet Finance of Zhejiang University, and Cambridge-based Crowdsurfer.

"The index will capture information from thousands of crowdfunding platforms worldwide and enable investors to assess investment opportunities and manage risks," said Zeng Tu, CEO of BBD China. The index will be available to the public in the coming months.

The index will play a role that is similar to that of the FTSE Index to the global equity market. The index's changes will be indicative of the ups and downs of the crowdfunding market as a whole.

Crucially, it will be available to banks and asset managers, so they can create derivative products, such as a fund that tracks the index, which has not yet been formally named. Such derivative products will allow investors to enjoy the profits of the industry without directly investing into crowdfunding platforms.

Regulators and policymakers will be able to use the index to monitor the size and growth of the alternative finance segment, and create policies to support its healthy development.

Crowdfunding gained prominence after the 2008 financial crisis severely battered the credibility of traditional banks. It has been supported by the growth of internet technology.

By 2015, 11.4 billion yuan ($1.65 billion) had been raised through crowdfunding platforms in China, a small part of the $34 billion raised globally. But the World Bank forecasts great crowdfunding growth potential in China, estimating it will be worth $50 billion by 2025-52 percent of the global total.

Richard Baker, chairman of Crowdsurfer, said the index will capture both peer-to-peer crowdfunding and equity crowdfunding, and may have sub-indexes for different industries.

The Academy of Internet Finance opened a London office on Tuesday. Ben Shenglin, AIF's dean, said it will work on the index, build fintech collaboration, and support knowledge exchange with British universities.

Financial technology collaboration between China and the UK has grown in recent months, following the establishment in November of the UK-China Fintech Bridge, a government initiative to facilitate fintech information and regulation communication.

BBD established a London office and a research and development center in Cambridge last year.

The moves follow a spate of branch openings in the UK. Popular Chinese payment company Alipay has its European headquarters in London. Alipay's move will be followed by WeChat Pay, another Chinese mobile payment company, whose services will become available to Chinese tourists in the UK next month.

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