On March 29, the Shanghai and Shenzhen stock exchanges respectively issued business rules and related supporting guidelines for asset-backed securities (ABS). Among them, the ABS business rules cover the listing conditions and confirmation procedures of asset-backed securities, issuance and listing transfer, information disclosure, protection of the rights and interests of holders, suspension and resumption of trading, termination of listing, self-discipline and supervision, etc., and make comprehensive and basic specifications for the whole process of asset securitization business.
As of the end of February 2024, the Shanghai Stock Exchange has issued a total of 6.58 trillion yuan of asset-backed securities, with a custody volume of 1.39 trillion yuan, and the Shenzhen Stock Exchange has issued more than 2.49 trillion yuan of asset-backed securities, with a complete range of basic asset types. Asset-backed securities have become an important tool for the bond market to help the real economy revitalize its stock assets and broaden its direct financing channels.
Source: Shanghai and Shenzhen Stock Exchanges
Systematically standardize full-cycle business
As the asset securitization business enters a new stage of development and the market situation undergoes new changes, the need to consolidate the asset credit and bankruptcy isolation system, strengthen investor protection, and clarify self-regulatory requirements has become increasingly prominent.
The ABS business rules released this time integrate the current business guidelines and business guidelines, and systematically regulate the full-cycle business of asset-backed securities such as confirmation of listing conditions, issuance, listing transfer, and duration management of asset-backed securities in combination with the basic business rules of asset-backed securities formed by regulatory practice in recent years.
First of all, it clarifies the listing conditions, review procedures, basic assets and basic requirements for important business participants of asset-backed securities, consolidates the foundation of the asset-backed securities access system, and stabilizes market expectations.
Secondly, the management mechanism for the duration of asset-backed securities should be clarified, and the issuance and listing procedures, investor suitability, transfer mechanism, information disclosure, suspension and resumption of trading and termination of listing should be comprehensively regulated, and the whole chain supervision of "pre-event + ex-post + ex-ante + ex-ante" should be strengthened.
In addition, strengthen risk prevention and control, clarify the credit risk management responsibilities of important business participants, standardize the relevant arrangements for holders' meetings, and give full play to the effectiveness of mechanisms for protecting the rights and interests of holders. Clarify self-discipline management measures, continue to implement "zero tolerance" for violations, and strengthen supervision.
Regulate continuous disclosure
In terms of supporting guidelines, the SSE issued continuous information disclosure guidelines, which further clarified the disclosure requirements for periodic and interim reports of asset-backed securities, clarified the general provisions on information disclosure, annual asset management reports, annual custody reports and other disclosure matters, and strictly regulated the specific requirements for information disclosure.
The content of the continuous information disclosure guidelines inherits the original disclosure requirements, and makes optimization and adjustments in combination with regulatory practices: first, the rules are improved and systematic, the disclosure requirements of the original periodic reports and interim reports are integrated, and major matters related to the assets or cash flows of special plans, business participants, and asset-backed securities are standardized; The third is to set up a special chapter to clarify the disclosure requirements for the meeting of holders, promote the formation of the common will of holders, and improve the efficiency of credit risk handling.
The Shenzhen Stock Exchange revised and issued three guidelines: periodic reports, interim reports and credit risk management. Among them, the main contents of the revision of the guidelines for periodic reports and interim reports are: improving the completeness requirements for document preparation, refining the basic elements of disclosure in various types of announcements, strengthening the targeted requirements for the disclosure of major types of assets, highlighting the characteristics of underlying assets and their dynamic changes, strengthening the timely disclosure and early warning of major events, and consolidating the manager's understanding of special plan assets, Continuous monitoring obligations of cash flow and key business participants, improve the mechanism and arrangement of shareholders' meetings, and add disclosure requirements for the implementation and progress of shareholders' meeting resolutions, so as to strengthen the protection of shareholders' rights and interests.
The credit risk management guidelines aim to enhance the systematic, forward-looking and targeted credit risk management of asset-backed securities business. On the one hand, consolidate the main responsibilities of important business participants and strengthen credit risk management responsibilities. Refine the requirements for risk monitoring and investigation of managers, and improve the effectiveness of credit risk management work. On the other hand, improve credit risk response and disposal arrangements, encourage important business participants to actively manage their own credit risks, and optimize the reporting requirements for credit risk response and disposal plans.
The function of asset securitization business to revitalize stock has become increasingly prominent
In recent years, the Shanghai and Shenzhen Stock Exchanges have implemented national strategies to give full play to the functions of asset-backed securities markets and help increase the proportion of direct financing.
As of the end of February 2024, the Shanghai Stock Exchange has issued a total of 6.58 trillion yuan of asset-backed securities, with a custody volume of 1.39 trillion yuan, leading the high-quality development of the domestic asset-backed securities market, and playing an important role in revitalizing existing assets, reducing corporate leverage, broadening financing channels, serving the real economy, and helping supply-side reform.
Up to now, the cumulative issuance scale of asset-backed securities in Shenzhen has exceeded 2.49 trillion yuan, with a complete range of basic asset types and prominent characteristic underlying asset types, which have become an important tool for the bond market to help the real economy revitalize existing assets and broaden the direct financing channels of enterprises.
The Shanghai and Shenzhen Stock Exchanges said that in the next step, they will firmly grasp the main line of strengthening supervision, preventing risks and promoting high-quality development, closely follow the theme of high-quality development of the bond market, improve the rule system of asset-backed securities, guide market entities to return to their responsibilities, stimulate the momentum of market innovation and development, further give full play to the function of the asset securitization market, promote the high-quality development of the bond market, better serve the construction of a new development pattern, and continuously enhance the quality and efficiency of serving the national strategy and the real economy.
Reviewer: Peng Yong
Editor: Zhang Jing Proofreader: Yu Hongbo Producer: Zhang Nan Issued: Fei Yangsheng