The Risk And Control Of Art Mortgage's Securitization

Art securitization, as a financial innovation, originating from asset securitization, has been developed maturely. The theoretical basis is that, because securities sponsors lack funds and wide market liquidity, but with predictable cash flows ability by reorganization elements of cash-flow risk and income after the separation , cash flow will be "true soled" to an organization, which is far from bankruptcy risk . This dissertation will divide into two major parts: securities and Securities Exchange. Major risks involved in the securitization process include: legal settings of SPV (Special Purpose Vehicle), establishment of works of art' security standards, and credit rating. The establishment of SPV legal form has decisive impact on its function, which means company, trust and partnership have their own advantages. On the one hand, the specific choice depends on a country's legal traditions and legal environment; on the other hand, the choices of legal forms also decide the role of SPV in risk isolation. Moreover, credit ratings and disclosure are connected with SPV operation, and effective system of credit rating is necessary for guaranteeing SPV operation and investors' interests. In addition, how to establish standards of works of art when faced with the value of authenticity and value assessment with the final aim of preventing and controlling risks are also crucial. During the process of securities transactions, this essay mainly focused on legal issues relating to market regulation, real sales, combined entity, tax processing and information disclosure .As the work of art itself can not generate cash inflows, it can only play the role of creditors' sponsor. Therefore, the supervision for debtor will be transferred to their own personal financial situation, resulting in dispute of information disclosure and privacy .This essay draw lessons from European and American financial laws and regulations in this field, combined with China's civil law on privacy, comparing and discussing this issue. Referring to real sales and merged entity, this essay combines research results of traditional asset research and characteristics of China's art market, with the purpose of discussing theory before establishing the system.