Plan to promote securitization
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.