Ant Group had its US$34.4bn IPO stopped by China because the government there was looking to protect capital markets stability, according to reports today.

The Shanghai listing of the payment specialist, which is run by Chinese billionaire and Alibaba (NYSE:BABA) founder Jack Ma, was halted two days before the record-shattering flotation.

READ: Ant Group’s Shanghai listing suspended two days before US$34.4bn IPO

The Shanghai stock exchange said there were “major issues” following “changes in the financial technology regulatory environment”, so Ant could not meet “listing conditions or information disclosure requirements”.

The Hong Kong exchange then announced Ant had decided not to go ahead with the listing.

The move was likely instructed by Chinese president Xi Jinping, the Financial Times reported, while the foreign ministry said the move was to “better maintain the stability of the capital markets and to protect investors’ interests”.

According to Reuters, this move is set to delay and lower the value of the IPO, rather than stop it permanently.

Ant’s image has been focusing on the tech aspect, rather than the financial, which is why the valuation mushroomed to US$313bn.

However, Beijing was concerned with the online lending business, which made nearly 40% of total revenues in the first half of the year.

New rules drafted on Monday might hurt this side of trading since online lenders will be expected to dish out more of their capital for loans.

Ant sources loans for consumers and small businesses from banks and carries 2% of its outstanding microfinance loans, though with the new rules the percentage would jump to 30%.

These outstanding loans were worth 1.8 trillion yuans or £210bn in its balance sheet.

Its co-lending subsidiaries Huabei and Jiebei may also have to stop offering wealth management products.

Ma, Ant’s executive chairman Eric Jing and chief executive Simon Hu were told by the regulators on Monday that they were facing tighter scrutiny by the government.

China is fearing rising defaults and lower asset quality amid the pandemic, echoed by state bank executives who have been calling out on unfair regulatory advantages for fintech companies.

Last week, Ma – whose stake in Ant would have been worth US$17bn based on the IPO price – said the Chinese financial regulation was outdated and not suited for fintech companies.

There have been rumours Ma lobbied against tighter regulations but Ant denied these allegations.

“The claim is baseless and is pure fabrication. Ant Group has made full disclosure of the material risks of our business in the prospectus,” a spokesperson told the FT.

Ant was set to sell about 11% of shares, worth US$34.4bn, on its Thursday debut, while Wall Street bankers and those working on the deal would have pocketed at least US$300mln in fees.

The sale would have been even bigger than the US$29.4bn taken out of the market by Saudi Aramco a year ago.