Research Of Supervision Regime For Asset-backed Securities

Asset-backed Securities (ABS) is the world's fastest growing financial innovation tool in recent years, and is the combination of derivative securities and financial engineering technolog. It is not only a kind of financial novation, but also an innovation of financing system. Asset-backed Securities is a project-financing of income-oriented approach based on asset, by the participation of sponsors, issuers, services, investment banking, credit enhancement institutions, credit rating agencies, through the provision of two levels of credit, that is, the credit of asset itself and derivatives credit, through the bankruptcy-remote, credit enhancement technology, the assets can be converted into negotiable securities to meet the different needs of all participants, to promote the improvement of the efficiency of the financial system and financial market developments. Just as every coin has two sides, ABS in the financial system is also a double-edged sword. In the samt time of promoting the improvement of the efficiency of the financial system and financial market development, as a structured financing tool, asset-backed securities, also has liquidity risk. America's subprime mortgage crisis reminds us that we must supervise it to prevent the risk from occurring though it plays an active role. In the operation of asset-backed securities, regulatory agencies should adopt a comprehensive supervision and proper supervision attitude, from basic design of the system to the asset-backed securities issuance and trading. The paper, drawing on the basis of legislative experience abroad, combined with domestic and international asset-backed securities practice, discusses the the regulatory legal issues in different sectors of asset-backed securities operation. This paper consists of seven parts.Chapterâ… "An Overview of Asset-backed Securities". The paper first briefly introduced the development of asset securitization, and then elicited asset-backed securities, which was the main object of study, through the classification of securitization. In accordance with the nature of the asset-backed securities, securitization products can be divided into mortgage-backed securities (MBS) and asset-backed securities (ABS). Then, the author studied the legal nature of asset-backed securities. Asset-backed securities is very special, even though its labeled"securities", but it has a very clear distinction with the traditional securities (stocks and bonds). Whether is Asset-backed securities part of the securities? The answer to this question is directly related to the issuance and trading of asset-backed securities, as well as the protection of investors. This is the first problem to solve in studying the asset-backed securities regulatory system. By comparing"security"concept among the United States, Japan, and Taiwan as well as the relevant provisions of asset-backed securities, I draw the conclusion that asset-backed securities belongs to securities, but it also contains its own particularity. Thus, in regulation, it has certain differences with traditional securities.Chapterâ…¡"Regulatory Theories of Asset-backed Securities". This chapter deals with the theoretical basis of regulators of the asset-backed securities. The relationship between asset-backed securities and regulatory is actually relationship of financial innovation and financial supervision. First of all I've done some research on the theory of financial regulation and found that financial innovation are closely related each time the theory of financial regulation updates. Then, I do the research of relationship between asset-backed securities and financial supervision, as a financial innovation. By comparing asset-backed securities regulation legislation in USA, Britain, Japan, South Korea and Taiwan, I draw the conclusi on that it is necessary to supervise asset-backed securities. Then, the principles and objectives of asset-backed securities regulatory in our country were presented. Chapterâ…¢"Regulation in Preparatory Phase of Asset-backed Securities Issuance". Operation of asset-backed securities is a systematic project, a lot of preparatory work should be done before the issuance of securities in order to avoid risks as much as possible to protect the interests of investors. The chapter mainly studied the supervision of assets and SPV, because both of them are the main part of the risk isolationin in the preparation phase. The supervision of the underlying assets include: supervision of the assets'quality; supervision and regulation of the true sale of assets. Regulation of SPV is mainly achieved through bankruptcy, including: SPV's own bankruptcy risk isolation and bankruptcy risk isolation from the originator. Finally, regulatory proposals of the qualification SPV are proposed, through the supervision of the establishment, operation, dissolution and cancellation of SPV, to achieve the purpose of avoiding risks.Chapter IV,"Regulation of Asset-backed Securities Issuance". In the phase of issuance, asset-backed securities issuance should comply with the relevant rules of asset-backed securities issuance in addtion to the rules of securities issuance because of its uniqueness. I mainly do the reseach in three aspects, including market access of the main participation, choice of issuance method in asset-backed securities issuance and information disclosure. In the aspect of market access of participation, not all financial institutions have the right to issue asset-backed securities, and not all of the legal subjects are eligible to invest in asset-backed securities. Resesrch was maily done on the market access of the issuer (SPV) and investors. There are mainly two forms to issue, public offering and private placement. After compareing the merits of the two method, I draw the conclusion that public offering is more popular in the international issuance, while in our practice can only private placement be taken. As the private placement issuing may have some additional costs to asset-backed securities, so I propose to give our private placement a certain exemptions, refering to the U.S. waiver system.Chapter V,"Regulation of Asset-backed Securities Transactions- Centerining Information Disclosure System". Regulation of asset-backed securities transactions should emphasis on information disclosure regulation. As there is information of originators in the series of agreements in the asset-backed securities, information, they would not like to disclose this information. For the protection of investors, of course, the information should be disclosed as much as possible, here there is a contradiction. Through theoretical analysis of information disclosure as well as asset-backed securities information disclosure requirements in several countries, recommendations were proposed on China's asset-backed securities information disclosure system. In addition to information disclosure, another problem of asset-backed securities transactions is the construction of market place. At present, China's ABS trading is mainly by means of inter-bank lending market, and has not proprietary trading platform. With the continuously enriched securitization products and the transaction's continuous activety, it is inevitable to set up trading platform for asset-backed securities.Chapterâ…¥"Supervision of Credit Rating Agencies of Asset-backed Securities". Asset-backed securities credit rating is an important step in its operation, in view of the uncontrolled credit rating agencies is one of the incentives of the U.S. sub-prime mortgage crisis, which can not be ignored, the author makes it a separate chapter. This chapter did the research of the monitoring system of credit rating analysis in USA and Europe and put forward a reference to our asset-backed securities market supervision of credit rating agencies. Recommends are made to the implementation of China's certification of credit rating agencies, regulatory system and strengthen the practice of rating agencies to regulate and supervise the establishment, as well as give full play to the credit rating industry associations of the industry self-regulation.Chapter VII"Improvement of Our Asset-backed Securities Regulatory System". This chapter first analyzes the status quo of China's asset-backed securities market, as well as China's regulation on asset-backed securities of legislation. In order to promote the development of asset-backed securities market, the Government has adopted many laws and regulations to address legal obstacles in the operation of the asset-backed securities. But comparing with mature countries and region in asset securitization market, there still exists many problems, including system building and the specific application problems. To solve these problems, we should learn from the U.S. sub-prime crisis in improving the asset-backed securities regulation. The proposals to the improvement of asset-backed securities regulatory are as follows: asset securitization special legislation, a sound supporting laws and regulations; to change the separate supervision mode and proceed with appropriate supervision; improve the supervision of credit rating agencies; strengthen industrial self-regulation; improve information disclosure system and actively foster investment entities.