Securitisation Bill to be ready by next year
View(s):The Securities and Exchange Commission (SEC) is revisiting an old piece of legislation in a bid to step into the future.
The Securitisation Bill, drafted in 2009 at the height of the global financial crisis, is being re-considered by the regulator in a bid to hold those who deal in securitisation more accountable, SEC officials said. This was said by Suhadini Wickremesinghe, Assistant Manager – Legal and Enforcement SEC during a presentation on ‘Changes in the Regulatory landscape’ at the 6th Capital Markets Conference (CAPM) held on Wednesday in Colombo. “We hope to introduce it by next year,” she said.
Securitisation is the process through which a company designs a financial instrument by combining its other financial assets and then marketing different tiers of the repackaged instruments to investors. This process can encompass any type of financial asset and promotes liquidity in the marketplace.
As an example, a leasing firm can opt to pool various types of their customers’ leases and then in turn obtain a loan from a bank against these leases as a whole. Similarly contractual debt such as residential mortgages, commercial mortgages or credit card debt obligations can be combined and then marketed into different tiers of the repackaged instruments to investors.
As per SEC data, in 2009 there was nearly Rs. 25 billion worth of issued paper in asset backed securities. “Most leasing firms are into this type of securitisation. They parcel well performing leases and sell it to investors through a trustee. The trustee will manage it for them,” an SEC official told the Business Times, separately.
He added that there are many small firms that aren’t regulated by any regulatory body which poses a threat. This is another reason why the SEC wants the Bill hastened.
CAPM also saw discussions on the Inland Revenue Act, the Foreign Exchange Act as well as the SEC Act. Cryptocurrencies witnessed many questions of interest, whilst discussions revolving round the use of Blockchain Technology, Fintech and Digital Disruption were also featured at CAPM. (Duruthu)