On November 19, 2014, the China Securities Regulatory Commission (hereinafter, the "CSRC") promulgated the Administrative Provisions on the Asset Securitization Business of Securities Firms and Subsidiaries of Fund Management Companies and Accommodating Measures such as the Guidelines for Information Disclosure for the Asset Securitization Business of Securities Firms and Subsidiaries of Fund Management Companies and the Working Guidelines for the Due Diligence of the Asset Securitization Business of Securities Firms and Subsidiaries of Fund Management Companies (hereinafter, the "Administrative Provisions and Accommodating Measures"), which came into effect on the day of their promulgation.

The highlights of the modification to the original Administrative Provisions on the Asset Securitization Business of Securities Firms by the Administrative Provisions and Accommodating Measures are provided as follows:

  1. In addition to the Securities Law, the Securities Investment Fund Law and the Provisional Measures for the Supervision and Administration of Privately Placed Investment Funds are added as higher laws.
  2. The principal entities for developing asset securitization business are expanded from securities firms to cover securities firms and the subsidiaries of fund management companies; and the Administrative Measures for the Asset Securitization Business of Securities Firms are renamed as the Administrative Measures for the Asset Securities Business of Securities Firms and the Subsidiaries of Fund Management Companies.
  3. It is specifically stipulated that securities firms and the subsidiaries of fund management companies may develop asset securitization business via a special purpose vehicle. A special purpose vehicle refers to a dedicated asset support project set up exclusively by a securities firm or a subsidiary of a fund management company or any other special purpose vehicle recognized by the CSRC in order to develop asset securitization business.
  4. Prior administrative review is canceled, and after-the-fact reporting of the China Securities Fund Association and the management of a negative underlying asset list are also implemented.
  5. Supervision over focused aspects is enhanced; accommodating rules with respect to information disclosure and due diligence are formulated; and the requirements for the verity of underlying assets are enhanced to strengthen investor protection.
  6. Leased assets are included in the scope of underlying assets.
  7. With respect to the timing of releasing relevant guarantee burden for underlying assets and other right restrictions, it is clearly stipulated that the relevant guarantee burden and other rights restrictions should be eliminated when an original rights holder transfers underlying assets to a dedicated program.
  8. It is specifically required that service organizations such as audit or appraisal entities providing professional advice for asset securitization business should have relevant qualifications for securities and futures business.
  9. The National Equities Exchange and Quotations is included as an asset-backed securities trading site.