After almost two years of development, the biggest social media and gaming company in China, Tencent Holdings Ltd and its finance startup partner, Shenzhen Pingguo Shuju Keji Ltd., have announced they are launching their system for over-the-counter bond deals on Friday.

QTrade will allow traders to meet online and negotiate prices through Tencent’s popular QQ messaging. According to a report from Bloomberg, the co-founder of the Shenzhen-registered startup, Zhou Jingyu, said the platform would verify the identity of both parties and log their conversations and transactions for a minimum of five years. This way it will be fully compliant with securities regulations.

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CSRC crackdown

The China Securities Regulatory Commission (CSRC) has been tightening its scrutiny on brokers. As a result, the Chinese market is one of the hardest for brokers to enter.

From December, new regulation will be introduced that forbids traders from using personal emails and instant messaging platforms to discuss trade deals, deferred compensation, and incentives exceeding an excess of 1 million yuan. 

Although the government does have its own chat systems for dealers, according to QTrade estimates, more than 70 percent of bond trades are now conducted over personal messaging accounts such as Tencent’s QQ messaging service.

Commenting on the upcoming launch of the service, co-founder of Shenzhen Pingguo Shuju Keji Ltd., Fiona Liu said in a statement: “There’s been a discrepancy between where traders complete their deals and where they negotiate. We want to provide a safe and compliant instant messenger to make sure that trading activity is regulatory compliant.”

Tencent’s QQ has more than 800 million active users. The company said in a statement that the platform would leverage its messaging, big data and machine learning technology while also complying with regulation to lower the risk

QTrade

Targeted at professional investors, QTrade allows deals to be negotiated through the platform. Users will be able to import their contact lists on QQ and add up to 100,000 people.

Although investors can communicate on the platform, all transactions will still be processed through official channels, such as the China Foreign Exchange Trade System.

According to Zhou, the platform will also allow regulators to search by users or timeline and format trading data through its analysis tools.