As soon as the Rules of Recognition were issued, the biggest concern in the industry was the listing of non-standard assets, especially the clear definition of direct financing tools for financial management of Banking Financial Registration Trusteeship Center Limited Company and the creditors rights financing plan of Beijing Financial Asset Exchange Limited Company as non-standardized creditors rights assets.
Before that, the market also expected that the direct financing tool of financial management of the bank and the bond financing plan of Beijin institute could formally obtain the identification of the standard bond assets, so as to realize the non-standard transfer of the standard. Now this road has also been blocked, and some insiders even commented that it was disillusioned.
First of all, look at several key provisions in the Recognition Provisions:
1. In addition to the recognized types of financial products which belong to the bond-marked assets, the Rules of Recognition for other creditors rights assets are recognized as the bond-marked assets. It is proposed that five conditions should be met, namely, full disclosure of information, centralized registration and independent trusteeship. These five conditions are consistent with the principle requirements of the new regulations.
2. It is necessary to apply to the central bank for the confirmation of the bid bond assets. The applicant is an infrastructure institution that provides such infrastructure services as registration, trusteeship, liquidation and settlement for the creditors rights assets.
3. Clearly put forward the following types of creditors rights and assets as non-standard assets: financial direct financing tools of Banking Finance Registration Trusteeship Center Limited Company, products related to the transfer of credit assets and income rights of Banking Credit Asset Registration and Transfer Center Limited Company, creditors rights financing plans of Beijing Financial Asset Exchange Limited Company, and those of China Securities Inter-agency Quotation System Limited Company. Income vouchers, the creditors rights investment plan, asset support plan of Shanghai Insurance Exchange Co., Ltd., and other financial products that provide creditors rights financing for a single enterprise that do not meet the five conditions for determining the assets of the tender bonds at the same time are non-standardized creditors rights assets.
4. Setting up transitional period arrangement, during the transitional period of the new regulations on assets management, for the assets not included in the statistical scope of non-standardized creditors rights assets of the financial supervision and administration department before the promulgation of the Rules, the regulatory requirements of term matching, quota management, centralized management and information disclosure of non-standard assets investment can be exempted; for those newly added after the promulgation of the Rules, No. Exemption.
Viewpoint 1: Break the illusion, the creditors rights and assets such as Yindeng Center and Beijin Institute are regarded as non-standard.
The Recognition Rules not only clearly put forward five conditions for identifying the assets of the bond, but also clearly defined whether some of the creditors rights assets with big market divergence should be regarded as non-standard or standard after the issuance of the new regulations.
There are different opinions in the non-subject-matter identification industry, some believe that it exceeds market expectations, but others believe that although the criteria for determining the assets of the subject-matter bonds are more stringent, the definition of high threshold is conducive to the return of the capital management industry to its origin. A group of people from the Ministry of Asset Management in Shanghai told securities firms in China that the scope of recognition of the assets of the bid bonds in the Rules is stricter than before, but some non-standard assets and non-standard assets have not been transparent before. For some vaguely defined assets, many institutions even claim to be the assets of the bid bonds themselves, and the uniformity of industry standards is poor, which does not meet the net assets management industry. In the direction of value-based transformation, the Recognition Criteria can clearly define the underlying debt assets with more stringent criteria, which is actually conducive to the return of the capital management industry to its source.
Relevant officials of the Central Bank also indicated that when drafting the criteria for determining the assets of tender bonds, the regulatory authorities should try to avoid the market fluctuation caused by the identification of the assets of tender bonds. Whether to identify the assets of tender bonds fully respects the wishes of relevant market participants and infrastructure institutions, and stipulate that the regulatory requirements for the assets in stock should remain unchanged during the transition period, so as to promote a smooth transition of the market and effectively prevent it. Discuss the risk of risk management.
Li Chao team of Huatai Securities believes that institutional creditors rights such as Yindeng Center and Beijie Stock Exchange are defined as non-standard. They are regulated strictly by the regulatory authorities and are conducive to the healthy development of direct financing. In addition, the implementation of the new regulations should be based on the strict definition of non-subject matter. Therefore, as one of the core issues of the new regulations, the strict definition of non-subject matter is conducive to the effective prevention and control of financial risks.
Point 2: Inter-bank loan and agreement deposit will be affected.
Standardized creditors rights assets referred to in these Rules refer to fixed income securities such as bonds and asset-backed securities issued according to law, mainly including Treasury bonds, central bank bills, local government bonds, government-backed agency bonds, financial bonds, debt financing instruments of non-financial enterprises, corporate bonds, corporate bonds, international institutional bonds, interbank deposit receipts, etc. Credit asset-backed securities, asset-backed bills, asset-backed securities listed on stock exchanges, and fixed income public offerings of securities investment funds, etc. Where other creditors rights assets are recognized as standardized creditors rights assets, the following five conditions shall be met at the same time. The following five conditions shall be further refined on the basis of the new regulations on capital management:
(1) Divide equally and trade equally. Private issuance by bookkeeping, filing or tendering. During the issuance and survival period, there are two or more qualified investors, with the par value or its integer multiple as the minimum trading unit, with standardized text of the transaction contract.
(2) Full disclosure of information. Investors and issuers agree on specific arrangements for information disclosure in issuing documents, such as mode, content and frequency. The subject responsible for information disclosure ensures that information disclosure is true, accurate, complete and timely.
The issuer is obliged to pay the investor by providing cash or financial instruments, or by cash flow generated from the bankruptcy-segregated basic assets, and at least includes the issuance amount, par value, issuance price or interest rate determination method, duration, issuance method and underwriting method.
(3) Centralized registration and independent trusteeship. The bond market registration Trustees approved by the Peoples Bank of China and the financial supervision and management department shall be centrally registered and independently trusteeed.
(4) Fair pricing and perfect liquidity mechanism. We use inquiry, bilateral quotation and matching of bids to actively provide market-making and valuation services by market-making institutions and underwriters. Buyers and sellers shall first determine the transaction price according to the historical transaction price or the quotation of market makers and underwriters. If the asset has no historical transaction price or quotation, it can be evaluated by other third parties. Other third-party valuation agencies providing valuation services have a sound corporate governance structure, which can effectively deal with conflicts of interest, while ensuring the valuation quality through reasonable quality control means, and open valuation methods and valuation processes to ensure transparency of valuation.
(5) Transactions in the inter-bank market, the stock exchange market and other trading markets agreed by the State Council. Institutions providing such infrastructure services as registration, trusteeship, liquidation and settlement have been integrated into the overall supervision of infrastructure in the inter-bank and exchange bond markets. They coordinate with other infrastructure in the bond market in accordance with the principles of hierarchical, orderly, organic complementarity and diversified services. Relevant businesses follow the unified and standardized arrangements for bonds and asset-backed securities.
Many respondents reflected that the Rules not only clearly classify creditors rights and assets which were regarded as non-standard in the past as non-standard in the non-standard, but also make identity confirmation for some assets which were divergent in the past market and did not have a clear definition of categories. Among them, interbank loans and agreed deposits are the most influential ones.
Interbank loans and agreed deposits are relatively high proportion of bank financial investment in the past two years. Before that, there was no unified qualitative analysis in the industry. Some thought that they should be counted as non-standard, others thought that they should be counted as standard. According to the five conditions of the definition of bond assets given in the Rules of Recognition, such assets should be counted as non-standard, which will have an impact on non-standard proportion in bank financial management. The above-mentioned equity bankers said.
In the process of exploring the transformation of net worth, the shareholder said that in the initial stage, banks tend to issue regular open-ended financial products within one year, because such short-term financial products can be allocated to interbank loans or contractual deposits with an equal period of less than one year. The latter not only has a relatively high rate of return, but also can be guaranteed according to the valuation method of amortized cost. The stability of net value of holding property. However, if interbank loans and agreed deposits are counted as non-subject matter in the Rules of Recognition, it will affect the allocation of such assets in bank financing in the future.
Point of View 3: Standardized Bills Welcome Development Space
Whether creditors rights assets should be counted as non-standard or standard has an important impact on the investment of the capital management industry. Because according to the new regulations, the non-standard investment is more stringent, especially the limitation of the investment of the asset management products is greater when the time limit mismatch is not allowed. In addition to not allowing the mismatch of time limit, the new regulations also set a red line requirement for the proportion of non-target investment. In contrast, the assets of tender bonds are not subject to the requirements of term mismatch and investment proportion limitation.
Although many previously defined assets are clearly defined as non-standard assets in the Recognition Rules, the standardized bills on the ticket exchange should meet the standard of the bond assets, which also provides space for future standardized bills on investment in asset management products. In fact, at the beginning of the birth of standardized bills, it was designed according to the principled requirements of the new regulations on asset management.
In August 2019, the announcement on the declaration and creation of the first issue of standardized negotiable instruments in 2019 issued by the ticket exchange gave a clear definition of standardized negotiable instruments. Some industry analysts believe that the creation of standardized bills can enable a financial institution to directly connect the funds of the whole market and improve the liquidity of bills by creating standardized bills after holding a certain number of bills of the same acceptor (bank or commercial bills, discount or non-discount).
It is worth noting that the Rules of Recognition also leave a gap for the ticket exchange as the main body of application for the recognition of the assets of the bid bonds. Relevant central bank officials said that the five specific conditions for identifying bond-marked assets specified in the new regulations include trading in the trading market agreed to by the State Council in the inter-bank market, stock exchange market and other markets. Among them, the trading market is a comprehensive and inclusive concept, which is composed of various financial infrastructure, participants and financial product tools. Specifically, if a certain type of creditors rights assets are identified through the bond assets, the infrastructure institutions that apply will become an integral part of the inter-bank and exchange bond market, coordinate with other infrastructure in the bond market, and the relevant business also needs to follow the laws and regulations of the bond market.
Although the Recognition Rules set stricter than expected conditions for identifying the assets of the tender bonds, many analysts believe that the impact on the management industry can be controlled in the short term.
After the issuance of the new regulations on self-investment management, the industry has been more cautious in investing some assets that have doubts about the criteria. Moreover, the Rules of Recognition also set out the arrangement of exemption during the transitional period, so as a whole, the pressure on the transformation of investment management can be controlled. The above-mentioned equity bankers said.
The Recognition Rules point out that assets not included in the statistical scope of non-standardized creditors rights assets of the financial supervision and regulation department before the issuance of these Rules can be exempted from the regulatory requirements of the Guiding Opinions on the investment of non-standardized creditors rights assets such as term matching, quota management, centralized management and information disclosure during the transitional period of the Guiding Opinions. If the transitional period is still in existence after the end of the transitional period, it shall be properly handled in accordance with the relevant provisions.
China Banking Finance Market Report (the first half of 2019), issued by Yindeng Center on October 12, shows that the scale of non-guaranteed financing is stable, the net value of financing is rapidly advancing, and standardized assets such as bonds are the main assets of financial capital allocation. By the end of June 2019, the balance of non-guaranteed financing funds invested in deposits, bonds and money market instruments accounted for 66.87% of the total investment balance of non-guaranteed financing products. Among them, bond assets account for 55.93% of the investment balance of non-guaranteed financial products.
However, the strict restrictions on the assets of the bid bond will further increase the pressure of asset allocation on the asset side of the asset management products, and the banks financial management yield and product duration will be affected accordingly.
Huatai Securities Collection Team believes that since last year, non-standard investment restrictions have increased, and bank branches are affected by many factors such as lack of assets, resulting in insufficient supply of non-standard assets. This regulation strictly defines the classification of assets, which will further put pressure on the end of financial assets. Under asset-side pressure, financial interest rates will continue to decline slowly. As a result of the existence of a spreads of up to 100 bp, the IMF has continued to transfer to monetary financial products since this year. This trend will continue, but the interest rates of the two are expected to converge gradually in the future. With the decrease of interest rate, residentsacceptance of long-term products is increasing. Banks financial accounting should deal with long-term products by issuing more long-term products, so as to enhance the non-standard investment ability.