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China's top securities regulatory commission said yesterday a batch of new products and regulations will be introduced into the capital market in the near term to give investors better protection and enrich their investment tools.
The pace of financial innovation has accelerated recently. And interaction between the insurance, banking and securities sectors has increased, said Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), yesterday at a financial conference held by Euromoney in Beijing.
He said relevant departments are working together on the promotion of more new fixed income investment products.
Some asset securitization projects are expected to be introduced after final adjustments and regulator's approval.
"The condition for promoting asset securitization is ripe," Shang said.
In April, China Cinda Asset Management won the approval for a pioneering securitization project, which, in joint efforts with Deutsche Bank, involved 2 billion yuan (US$240 million) of Cinda's non-performing assets.
But that was only a trial with the disposal of non-performing assets. Experts noted that securitization, a structured finance tool that repackages the cash flow generated from underlying assets into tradable securities, should not be limited to poor assets. Good bank assets, like some medium and long-term housing loans, should also be allowed to be securitized.
A number of Chinese banks, including China Construction Bank, China Development Bank and Shanghai Pudong Development Bank, have already applied to securitize part of their assets and issue relevant securities with the help of some investment banks.
Banking regulators have also expressed support for such innovations earlier this year.
More interaction and better co-ordination between the banking and securities watchdogs are expected to pick up the progress, analysts said.
In other areas of innovation, Shang Fulin said yesterday the commission is ready to introduce a new voting system for shareholders of listed companies on major corporate decisions.
According to a drafted rule, which was published in September for public consultation, listed companies that plan to issue new shares, convertible bonds or have their subsidiaries listed overseas should have the plans approved by more than half of the tradable shareholders.
They should also provide shareholders an Internet platform to attend general shareholder meetings and online voting abilities.
The arrangement is aimed to provide better protection of the interest of minority shareholders. Presently, only one-third of the shares of Chinese listed companies are tradable shares while the rest are nontradable shares that are controlled by the State or legal persons. The situation often puts small investors at a disadvantaged position in participating in corporate decisions.
"If the split equity structure is not resolved, we must make some breakthrough in the systematic arrangement to better protect investors' interests," said Shang.
(China Daily December 2, 2004)
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