SC issues FAQs on asset-backed securities

Kuala Lumpur, 12 September 2001

The Securities Commission (SC) has issued a set of answers to frequently-asked-questions (FAQs) related to the Guidelines on the Offering of Asset-Backed Debt Securities (ABS Guidelines). The FAQs pertaining to the special purpose vehicle for asset securitisation, approval process, originator, requirements for assets that may be securitised, true sale requirements, servicer, exchange control matters, and other matters, are available here in pdf.

The SC will issue FAQs from time-to-time to clarify and facilitate a better understanding on securitisation transactions.

The ABS Guidelines, issued on 10 April 2001, were formulated after extensive consultation with industry members and professionals. They are a part of SC's efforts to develop the corporate bond market, and is a milestone in the development of the capital market.

Asset securitisation generally involves the transfer of assets or risks to a third party where the transfer is funded by the issue of highly rated debt securities. Payment to investors are mainly derived from the cashflows of the assets.

Securitisation has numerous benefits. For an issuer, securitisation allows relatively illiquid financial assets to be transformed into liquid and tradeable capital market instruments. Issuers therefore will have a choice of more efficient and cheaper source of financing. For investors, the variety and flexibility of credit, maturity and payment terms made possible through securitisation structures provide investors a broader selection of fixed income products.


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