Securitization: The financial instrument of the new millennium

Securitization, the device that converts financial assets and relations into tradable commodities, is undoubtedly one of the most significant innovations of our time.

Having made its debut about 3 decades ago in mortgage markets in the USA, securitization has already turned about USD 4 trillion worth assets into capital market securities. Securitization has been used by the financial world as a powerful tool of liquidity and risk management. Securitization has to its credit substantial economic impact, proved empirically. In mortgage markets in many countries, it has enabled housing finance to be cheaper and more affordable, and thus promoted the demand for housing. In banking sector, securitization is widely used for more efficient use of capital, transformation of risk into an assessable and tradable security, and eventually, in lowering down the cost of capital. It has enabled infrastructural projects to be funded at cheaper costs; allowed intellectual property companies to encash their future earnings; enabled entities in emerging markets to pierce their sovereign ratings and reach international capital markets for cheaper funding.

Securitization in Asia:

Securitization made a late start in Asia, including Japan. But having done so, it is growing at a very fast pace.

In Japan, securitization grew almost 100% in 1999, for the third successive year. In the rest of Asia, a significant momentum for securitization transactions is already seen, with several transactions reported from Hong Kong, Singapore, Malaysia, Korea, India, etc.

However, securitization can still be regarded as developing in Asia. Regulations, prudential guidelines and laws in most Asian markets are yet to be defined to promote or regulate securitization. There is no accounting standard as yet from any of the Asian countries.

Why the Asian Securitization Forum

It is in this environment of promise and hope that we constituted Asian Securitization Forum, the premier body of securitization professionals in Asia and the Pacific Rim.

Briefly speaking, the purpose of the Forum is to accelerate the process of healthy growth of securitization in the region. The Forum intends to achieve this purpose through a multi-directional effort - more interaction and sharing of information among industry participants, investors and the intermediaries, standardisation of practices in the industry for health development, interface with the regulators for legislative changes where required, healthy and positive prudential regulations, meaningful accounting standards, etc. The Forum intends to provide a platform for industry interaction by way of an annual convention, publications, and information through its website. The Forum would also provide an institution for much-needed transfer of information through structured training courses, workshops, etc.

For the current activities and projects of the Forum, as also a report on on-going activities, click here

Area of operations:

The territorial area of operations of the Forum covers the whole of Asia and the Pacific Rim, including Japan and the Far Eastern countries, Australia, New Zealand, South and South East Asia, Middle East, Central Asia, Russia, Arabian countries, etc.

Members located in other parts of the World, but having some business interests in the Region are also welcome to the membership of the Forum.