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China Securities Regulatory Commission has recently decided to expand the scope for the pilot program of short-term bonds from 20 to all securities companies, and allow them to issue and transfer the short-term bonds via Shanghai and Shenzhen stock exchanges, Inter-agency Quotation and Service System for Private Placement Products and other trading places. Meanwhile, securities companies are allowed to launch asset-backed securities for margin trading and securities lending. Thus far, the financing channels for securities companies have been further broadened.
Since the pilot program of short-term bonds started in October 2014, all the 20 qualified securities companies have been playing an active part and making sound effects. As of June 30 2015, 9 issuers have obtained No Comment Letters (or Record-filing Notifications) with SZSE, accomplishing the issuance of 35 bonds raising funds of RMB 102.87 billion in total. The issuance of short-term bonds can not only help securities companies to solve their financing problems such as limited channels, single variety, high cost and seriously restricted credit line, but can also provide a market-based instrument and channel for securities companies’ short-term financing needs.
In order to facilitate the issuance of securities company short-term bonds in the entire industry, SZSE currently accepts electronic applications to confirm the transfer conditions and takes a green channel for the completeness verification. Once application materials are complete and qualified for non-public issuance, a No Comment Letter of Transfer Conditions can be obtained within two business days.
SZSE has always been supporting the innovation-based assets to launch asset-backed securities and has been expanding the scope thereof. Such assets include creditor’s rights of margin trading and securities lending, creditor’s rights of stock repurchase and pledge, commercial real estate properties, affordable housing construction, etc. With regard to the asset-backed securities for margin trading and securities lending, SZSE has previously carried out multiparty argumentation on definition and management of underlying assets and arrangements for collateral rights, and there have already been projects entering into the stage of listing conditions confirmation.
Since the implementation of record-filing system on asset-backed securities business, SZSE has constantly optimized the procedures for listing and transferring asset-backed securities and strengthened the supervision over their continuous information disclosure. On the one hand, SZSE raised the listing and transferring efficiency, optimized the review process, adopted the framework review method for multiphase products with the same trading structure, and enhanced the review efficiency for the re-issuance of mature projects; on the other hand, SZSE strengthened the requirements for continuous information disclosure and promulgated the SZSE No.1-3 Information Disclosure Format for Asset-backed Securities Business.
SZSE will continue to promote the expansion of short-term bonds and the implementation of the asset securitization for margin trading and securities lending, constantly improve the service quality and efficiency, and accelerate the development of exchange bond market.
