Plan to pro­mote se­cu­ri­ti­za­tion

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

The China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion is ac­tively work­ing with the China Bank­ing Reg­u­la­tory Com­mis­sion to pro­mote credit se­cu­ri­ti­za­tion, a CSRC spokesman said on Fri­day.

“The CSRC is ac­tively dis­cussing with re­lated de­part­ments [var­i­ous] is­sues in­clud­ing ex­pand­ing the scope of pi­lots and risk as­sess­ment,” the spokesman told China Daily.

He added that the CSRC has not yet de­cided to es­tab­lish any par­tic­u­lar rule on credit se­cu­ri­ti­za­tion.

The CBRC ap­proached the CSRC on the is­sue of pro­mot­ing bro­ker­ages’ se­cu­ri­ti­za­tion of credit as­sets, Reuters pre­vi­ously re­ported.

It has been re­ported that once the new line of busi­ness is ap­proved, banks’ credit as­sets — gen­er­ally, loans — can be repack­aged by se­cu­ri­ties firms as as­set-backed se­cu­ri­ties. The ABS could then be traded on stock ex­changes.

“The move is pos­i­tive for se­cu­ri­ties com­pa­nies be­cause we can par­tic­i­pate in a new line of busi­ness, and our co­op­er­a­tion with banks is also im­por­tant be­cause banks ‘own’ credit clients,” said Li Yizheng, a vi­cepres­i­dent at China Se­cu­ri­ties Co Ltd.

Li added that the ABS busi­ness is “very ma­ture” in the United States and has “great po­ten­tial” in China.

As of Dec 31, 2012, the in­ven­tory of se­cu­ri­tized credit as­sets to­taled 26.4 bil­lion yuan ($4.3 bil­lion), ac­count­ing for only 0.02 per­cent of bank as­sets in China, ac­cord­ing to the China Se­cu­ri­ties Jour­nal.

Li said that banks will dom­i­nate credit se­cu­ri­ti­za­tion in China in the short term, as only banks are now per­mit­ted to en­gage in the busi­ness.

The CSRC also said it is draft­ing a rule for pri­vate of­fer­ing funds, in­clud­ing those or­ga­nized by pri­vate eq­uity and ven­ture cap­i­tal firms. Fundin­dus­try as­so­ci­a­tions will be re­spon­si­ble for the regis­tra­tion and reg­u­la­tion of th­ese funds.

Pre­vi­ously, the PE and VC sec­tors were reg­u­lated by the CSRC and the National De­vel­op­ment and Re­form Com­mis­sion, the coun­try’s top eco­nomic plan­ning agency.

The NDRC was re­spon­si­ble for PE and VC funds’ regis­tra­tion.

The CSRC be­came the sole reg­u­la­tor of the PE and VC sec­tors in June.

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