Bond Market Innovation And Non-standard Debt Business Transformation

This paper mainly focuses on the non-standard debt business of the asset management industry in China,which has typical shadow banking characteristics.Financial repression and regulatory arbitrage motives are important reasons for the emergence and development of non-standard debt business.On the one hand,the extensive development of early non-standard business has expanded financial system risks.On the other hand,non-standard debt business has played a certain positive role in supporting the development of the real economy,meeting the diversified financial needs of investors as well as promoting financial innovation.The Guiding Opinions on Standardizing Asset Management Business of Financial Institutions(hereinafter referred to as the "New Asset Management Regulations")and its supporting rules put forward specific and comprehensive requirements for non-standard debt businesses,including restrictions on the investment scale of non-standard debt assets,prohibition of maturity mismatch,strict prohibition of capital pools,etc.It has been five years since the introduction of New Regulations on Asset Management,and the scale of non-standard debt businesses has been significantly reduced.Significant results have been achieved in de-channeling and de-nesting,the ability of supporting the real economy has been enhanced,the non-standard debt valuation system has been gradually explored and improved,and businesses with poor compliance have been gradually cleaned up.The guidance of authorities for non-standard debt business of the asset management industry is to standardize rather than prohibit,which is to better meet the financing needs of the real economy while reducing the risks of the financial system.Replacing non-standard debt assets with standard debt assets,the so called “standardization transformation”,is the ideal transformation path in line with the regulatory orientation.However,the asset securitization market still need to be further improved and the bond market is not stratified enough,making that the standard bond market has limited ability to undertake non-standard debt assets,and it is difficult to achieve a complete standardization transformation.Non-standard debt business still has its own necessity,and the transformation of non-standard business itself is equally important.Although some non-standard debt assets have achieved centralized registration and custody,with certain liquidity,which is more standardized than traditional non-standard debt assets,such assets are not the main investment target of non-standard debt business in the asset management industry.From a practical point of view,there is still a lot of room for improvement of non-standard debt business of asset management institutions.After the release of New Regulations on Asset Management,it is the general trend for asset management institutions to transform into standard assets investment.Traditional non-standard debt investment institutions such as wealth management companies have great pressure for transformation,and face severe challenges in terms of investors’ lack long-term investment concepts,insufficient risk management tools,lack of effective liquidity risk countermeasures,and have not yet formed differentiated competitive advantages.This paper proposes three ideas for bond market innovation to support the transformation of non-standard debt business of the asset management industry.First,in the current context that comprehensive standardization transformation is difficult to achieve,the transformation of non-standard business itself is very important,and the experience of bond market construction can be used to help the development of non-standard debt business.Second,replacing non-standard debt assets with standard bond assets is the ideal solution for non-standard debt business transformation.It is necessary to expand standardization transformation channels through multi-level bond market construction.Third,traditional non-standard debt investment institutions such as bank wealth management have developed into important investors in the bond market.It is necessary to help the transformation of standard investment through bond market mechanism innovation,thereby helping the asset management industry achieve high-quality development.