The Securities and Exchange Commission of Pakistan (SECP) has notified draft Asset Backed Securitization Regulations, 2022 (The “Regulations”) for public consultation. These regulations provide mechanism for asset backed securitization covering all aspects of the securitization process.
Currently, asset backed securitization is governed by Asset Backed Securitization Rules, 1999 (the “Rules”) and the subsequent Regulations are drafted to provide holistic regulatory framework under the Rules.
Proposed regulations would enable companies to raise funds from the capital market in timely and cost-effective manner through issuance of asset backed securities through two modes: i) public offering and ii) private placement. Moreover, under these Regulations real estate assets which have cash generating ability and actionable claims can also be securitized.
Under the proposed regulations companies can issue asset backed securities by creating a special purpose vehicle (SPV) registered with SECP under the Rules where companies can create 100% owned SPV. The format of application for registration of SPV, Fit & Proper Criteria and prospectus is provided as Schedule-I, Schedule-II and Schedule-III to the Regulations respectively.
Regulatory framework has been designed in line with the disclosure-based regime being followed by the regulator and global practices. Process flow for issuance of asset backed securities is covered in detail in draft Regulations and Summary of Regulations, available at SECP’s website at https://www.secp.gov.pk/document/notification-draft-asset-backed-securitization-regulations-2022/?wpdmdl=44849&refresh=62b2e37c86a8d1655890812. To facilitate users, a Summary of the Regulations highlighting key features is also published which can be accessed at https://www.secp.gov.pk/document/summary-of-draft-asset-backed-securitization-regulations-2022/?wpdmdl=44855&refresh=62b30b41910921655900993.
Stakeholders can provide their comments on draft regulatory framework at absrulefeedback@secp.gov.pk.
