Research On Legal Matters Of Risk-remote Mechanism Under Asset Securitization

Asset securitization started at 1970's in the USA and have become the most important financial tool in the international financial market because of its advantage---the risk-remote mechanism. The mechanism is the essential character of the asset securitization. By setting up an independent SPV to insulate the securitization assets from the risk of the whole assets of the originators and others, it can not only guarantee the investment safety of the investors but also bring more profits to them. This article analyses the mechanism from the aspect of law to reveal its construction process and its risk prevention of legal issues, and focus on how to construct the mechanism in China.The first chapter is an overview of the asset securitization. Sectionâ… refers the conception of asset securitization to convey to its readers a preliminary understanding. Then, sectionâ…¡expatiates on the flow of asset securitization briefly in order to make the reader know the flow and make for the following discussion. The third section introduces the legal content of the asset securitization briefly for the purpose of following discussion.Chaptersâ…¡andâ…¢of the dissertation details the specific legal matters of the risk-remote mechanism. In the real practice, the design for the risk-remote mechanism includes the structure of a risk-remote SPV and the achievement of "real sales". So the second chapter addresses how to create a risk-remote SPV. The third chapter addresses the achievement of "real sales".Chapterâ…¡discusses the problems that how to construct risk-remote SPV. The first section dissertates the legal character of SPV simply and emphasizes the legal characteristic of SPV which the SPV must be possessed of. The dissertation of the second section introduces property right form and legal form of the SPV organization and the corresponding comments made according to theirs advantages and disadvantages. To reach the goal of SPV risk-remotion, its main requirement is that the SPV itself can't be bankrupted easily, and that it should set apart the bankrupt risk between the SPV and the originator. So the third section discusses, from the perspective of legal means, that how to avoid the SPV's easily insolvency and make SPV away from the originator's and other participator's insolvency risks.After finishing the task of setting up a risk-remote SPV, we must consider how to really transfer the asset from the originator to the SPV, namely, the achievement of real sale. So the chapter three dissertates the legal problems of real sale. So the first section discusses about the mostly commonly used methods of assets' transfer---novation, assignment, trust and sub-participation. The second section focuses on the analysis of the legal judgment of real sale. Such judgments can be seen from two angles: from the sale itself and from the relationship between the SPV and the originator after the assets transferred.By discussing the construction of risk-remote SPV and real-sale of assets' transfer the author provides legal advice for the asset securitization in China. In chapterâ…£the author discusses the legal matters of risk-remote mechanism and solvency methods. In China the biggest obstruction is the conflict between the actual legal rules and the need of asset securitization. Thus, the sectionâ… andâ…¡detailedly analyzes from the legal matters on the SPV's risk remoteness and to achieve real sale of asset securitization in China and the sectionâ…¢provides the solvency methods of these matters in the base of the practice in China.