In recent years, the Shanghai Stock Exchange (SSE) has promoted the reform and innovation as well as the standard development of the asset securitization market by adhering to the principle of paying equal attention to the market development and the regulation and risk control. As a result, the amounts of the issued and listed assets-backed securities (ABS) have kept increasing. To further improve the rules system of the asset securitization market, enhance the information disclosure quality of ABS, strengthen the credit risk management in its duration, and earnestly safeguard legitimate rights and interests of investors, the SSE released and implemented the “Guidelines on the Content and Format of ABS Periodic Report” (the “Periodic Report Guidelines” for short) and the “Guidelines on the Credit Risk Management in Duration of ABS (Trial)” (the “Risk Management Guidelines” for short) on May 11, on the basis of summarizing the frontline regulatory experience and widely soliciting opinions of market institutions.
The “Periodic Report Guidelines” is oriented to helping investors make effective investment decisions and intensify risk disclosure. It has made clear the duties of obligors of ABS information disclosure, stipulated the general disclosure principle, formulation requirements and major content and format of the ABS periodic report, stressed on key points of disclosure, and enhanced the timeliness, pertinence and effectiveness of information disclosure, which will bring convenience for administrators and trustees to formulate and disclose periodic reports and provide investors with more abundant reference information for their investment decision-making.
The “Risk Management Guidelines” has set up a continuous and normalized credit risk management mechanism that covers the whole process of the ABS duration and all market participants. It has made clear the responsibility of credit risk management and stressed the core function of administrators with all participating market institutions taking the initiative to carry out credit risk management. It has been targeted to preventing and resolving credit risks as early as possible and stressed more on the beforehand and in-process monitoring, check and pre-warning on credit risks. It has categorized asset-back special plans according to credit risks and made differentiated arrangements for risk management. And it has required administrators to submit a periodic report on credit risk management every half a year, as well as a provisional credit risk report from time to time, so that regulatory institutions can learn about and grasp risks of ABS in time.
The “Periodic Report Guidelines” and the “Risk Management Guidelines” are the important self-regulation rules of the SSE asset securitization market. Their issuance and implementation will settle down the major responsibilities of participating market institutions, enhance the consciousness of various parties on information disclosure and risk management, and urge market participants to take their corresponding responsibilities. The implementation of relevant requirements in the guidelines will further enhance the information disclosure quality, shift the core of credit risk control forward, perfect the marketized and legalized credit risk resolving and handling mechanism, and deeply implement the SSE’s responsibilities on frontline regulation and risk prevention and control, thus earnestly protecting legitimate rights and interests of investors and facilitating the sound and orderly development of the asset securitization market.
For the convenience of administrators and all participating market institutions to better understand and implement the “Periodic Report Guidelines” and the “Risk Management Guidelines”, the SSE will organize relevant trainings to respond to the problems of market concern and to guide all participating market institutions to effectively implement relevant requirements in the guidelines.