In recent years, the Shanghai Stock Exchange (SSE) has continuously improved the fundamental system of asset-backed securities, strengthened front-line regulation and risk prevention and control, and maintained high-quality and stable development of the corporate asset securitization business, with the capacity for serving the real economy constantly strengthened. In order to further enhance the system of market rules for asset securitization, improve the quality of information disclosure for asset-backed securities, and effectively safeguard the legitimate rights and interest of investors, the SSE issued and implemented the “Information Disclosure Guidelines for Interim Reports on Asset-backed Securities” (the “Guidelines” for short) on November 1 based on earnestly summarizing the practical experience and extensively listening to the opinions in the market.
The “Guidelines” has the following characteristics in terms of contents and requirements. First of all, the responsibilities and time limit requirements for the information disclosure entities are defined, it is stressed that the managers and rating institutions are the direct information disclosure obligors, and the original stakeholders, important providers of cash flow and other participating institutions have the obligation for cooperation, and efforts are made in improving the timeliness and transparency of information disclosure; secondly, the requirements for the disclosure of information on major events are refined and enriched, and some circumstances are newly added as the major events, including the changes in the main agreements on the special programs, unfulfilled commitments, cash flow interception or account freezing, major adverse news reports in the market, etc., so as to enhance the pertinence and effectiveness of information disclosure; thirdly, the arrangements for interim information disclosure are improved, and some matters are further regulated, including the recurring purchases of the underlying assets, the holders meeting, the securities exercise, the trading suspension and resumption, etc., so as to provide more abundant reference information for the investors to make decisions on investment; fourthly, the format templates of the interim report are developed by drawing on the experience in regulation of credit debt, with a total of 25 report templates prepared to facilitate the use of participating institutions, so as to make the information disclosure more regulated and standardized.
According to an SSE official, under the unified deployment of the China Securities Regulatory Commission (CSRC), the SSE initiated the work in the formulation of the “Guidelines” in 2018, and has solicited opinions from the market institutions and relevant organizations several times. During the communication process, the managers, original stakeholders, investors and relevant institutions agreed on the necessity of formulating the “Guidelines” and its significance for improving the quality of information disclosure for asset-backed securities, enhancing the information disclosure system, and strengthening the protection of investors' rights and interests, and also proposed amendments on the relevant details of the matters to be disclosed in the interim report. With discussions at special meetings and careful study on several rounds of feedback, the SSE supplemented and revised the key contents such as the definition of major events and the disclosure frequency for recurring purchases, thus forming a more clear and complete content specification of the “Guidelines”, which is conducive to enhancing the market acceptance and increasing the effectiveness of the regulation of the business.
The issuance and implementation of the “Guidelines” is one of the important measures taken by the SSE to deepen the concept of information disclosure as the core of supervision. The implementation of relevant requirements will further improve the quality of information disclosure, consolidate the information disclosure system for asset-backed securities, help to tighten the market institutions’ main responsibility for information disclosure, raise all market participants’ awareness of information disclosure, provide protection for the investors to make decisions on investment, and enhance the capacity of the market participating institutions for risk management. Going forward, the SSE will organize special training, timely release the XBRL templates for the interim report, guide the market participants in improving their understanding of the systems and efficiently making relevant efforts, and promote the high-quality and orderly development of the market asset securitization business of the SSE through the effective connection and implementation of fundamental systems.