SHANGHAI Feb 26 China's market regulator issued
draft rules on Tuesday that would make it easier for brokerages
to package, securitise and resell a wide range of assets from
real estate to receivables to commercial paper, opening another
channel for liquidity to move into the real economy.
The draft rules did not include a date for implementation
and are intended to solicit feedback.
China launched a pilot programme to test asset-backed
securities (ABS) in 2005, but the government suspended the
programme during the global credit crisis. Mortgage-backed ABS
were widely blamed for the onset of the global financial crisis
Beijing relaunched the project in 2012 and has gradually
expanded the programme since.
The new regulations, published on the website of the China
Securities Regulatory Commission (CSRC), would open the market
to any brokerage with an asset management license. At present
only a few selected brokerages are allowed to create and trade
The rules also expand the classes of assets that can be
securitised to include loans, receivables, infrastructure
dividends, commercial paper, stocks, bonds, commercial property
and other kinds of real estate.
Once the assets are subdivided into tradeable securities,
they may be bought and sold on legally recognised exchanges
including the main bourses and over-the-counter markets.
If implemented, the regulations could help the development
of Chinese brokerages' asset-management business, which had
nearly 1.89 trillion yuan ($303.18 billion) worth of assets
under management by the end of 2012, according to data from the
Securities Association of China.
It could also help brokerages by giving them alternative
products to sell and potentially increasing commission revenues
through higher transaction volumes.
($1 = 6.2339 Chinese yuan)
(Editing by Robert Birsel)