PBC launched a consultation on the rules for verification of standard debt-based assets. The proposed rules clarify and list the standard and non-standard debt-based assets, in addition to providing the verification criteria and the related regulatory arrangements. To standardize financial institutions’ investment in asset management products, strengthen investor protection, promote sound development of direct financing, and prevent financial risks effectively, the draft rules have been formulated in accordance with the Guidelines of PBC, CBIRC, CSRC, and State Administration of Foreign Exchange on Regulating Asset Management by Financial Institutions. The deadline for comments is November 10, 2019. The rules shall take effect on the day of their official release. PBC also released questions and answers (Q&As) related to the draft rules.
Under the rules, standard debt-based assets refer to bonds, asset-backed securities, and other fixed-income securities, which are issued according to the relevant regulations. Other fixed-income securities include treasury bonds, central bank bills, local government bonds, financial bonds, debt-financing instruments for non-financial enterprises, bonds issued by international institutions, interbank certificates of deposit, credit asset-backed securities, asset-backed bills, and asset-backed securities listed for trading on stock exchanges. The rules further specify that to be recognized as standard debt-based assets, other debt-based assets are required to meet requirements related to the following:
- Equal division and tradability
- Information disclosure
- Centralized registration and independent custody
- Fair-value pricing and sound liquidity mechanism
- Trading of assets on markets approved by the State Council
Comment Due Date: November 10, 2019
Keywords: Asia Pacific, China, Banking, Securities, Asset-backed Securities, Debt-based Securities, Asset Management, PBC
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