China Market Development

The Chinese securitization market, while underdeveloped relative to the United States, is rapidly coming of age.

Briefing

SFA opens formal dialogue with the PBOC and Chinese regulators on how to ensure a safe and sound securitization market

SFA CEO Michael Bright met with the People’s Bank of China (PBOC) during a recent visit to Beijing. Following this meeting, the PBOC reached out to SFA for additional context on a variety of securitization-related questions. Please see SFA’s responses to the PBOC’s follow-up questions here.

China has committed to the development of a robust securitization market, and currently has the second largest market in the world. As global markets are all linked, SFA understands the importance of stability in securitization and we are pleased to help work to ensure a safe and sound global system. We look forward to continued productive engagement with the Chinese regulatory community.

The Chinese securitization market, while underdeveloped relative to the United States, is rapidly coming of age. There are many reasons for this, but the two primary reasons are: one, Chinese banks are incredibly large and have balance sheets that could be made more efficient by the presence of a secondary securitization market, and two, because the Communist Party has said that the development of such a market is a priority in the current Five-Year Plan.

The Association is engaged with government officials, trade associations, and employees of our member firms operating off the mainland and Hong Kong. In the coming years the Association aims to serve as a helpful bridge between domestic U.S. market participants and those in mainland China.

The Chinese securitization market is already the second largest in the world, although the vast majority of its liquidity today comes from onshore investors. As this changes, the Association will be engaged to help with the development of a safe and sound market for Chinese securities that enhances global growth and helps the Chinese to achieve their goal of operating with global standards in a global marketplace.

At YE 2018, RMB2.7 trillion of securitization notes were outstanding, up from RMB1.9 trillion at YE 2017 and RMB32.1 billion YE 2012, making China the largest securitization market in Asia and the second largest in the world behind the U.S.

Contact

Sairah Burki

Managing Director, Head of Policy

Sairah.Burki@structuredfinance.org

Alyssa Acevedo

Vice President, Policy Development

Alyssa.Acevedo@structuredfinance.org