The dual SPV: tips on how to proceed during policy transition

At a press conference held on 8 March 2014, the China Securities Regulatory Commission (CSRC) stated it would comprehensively spur the extensive development of the asset securitisation business this year and plan for the promotion of corporate asset and credit asset securitisation.

The CSRC has now abolished administrative permissions for the dedicated asset management plans of securities companies, further returning power to the market, and is additionally continuing to promote the listing of credit asset securitisation products on the stock exchanges, while vigorously developing accounts receivable securitisation and other such corporate asset securitisation. The CSRC will also strengthen prudential oversight at each stage of securitisation, and in light of the legislative and regulatory experience of mature markets, strengthen legislative research, make legislative proposals, and actively promote the improvement of the basic legal systems, accounting systems and tax systems relating to asset securitisation.

Dual SPV model

We have learned from relevant authorities that until the CSRC issues new regulations on asset securitisation, securities companies may continue to engage in asset securitisation business by other means, for example establishing a pooled asset management plan through a securities company to raise funds and use those proceeds to purchase into the dedicated asset management plan of a fund subsidiary, with the dedicated asset management plan of the fund subsidiary then linking the corresponding underlying assets.