China Allows Brokerages to Conduct Securitization Business

China issued rules for brokerages to convert loans and other assets into securities as regulators step up efforts to expand firms’ businesses.

Brokerages can now issue securities based on assets such as corporate receivables, credit assets, and rights to income of infrastructure facilities, according to rules posted on the website of the China Securities Regulator Commission March 15.

The rules take effect immediately, the securities watchdog said.

Seeking to boost the sector’s competitiveness, Guo Shuqing, chairman of the securities regulator since October 2011, has implemented measures such as relaxing restrictions on brokerages’ expansion and overseas investments and allowing them to sell mutual funds to the public.

The regulator is seeking feedback on draft rules for brokerages’ stock ownership for employees, it said in a separate statement on its website March 16. Existing compensation structures that focus on cash and short-term goals could harm the sector’s growth, it said.

Last week, the regulator said it would make it easier for fund managers and brokerages to invest in overseas capital markets as it seeks feedback on revised rules for China’s Qualified Domestic Institutional Investor program.

To contact Bloomberg News staff for this story: Aipeng Soo in Beijing at asoo4@bloomberg.net

To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net

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