The Isda Credit Support Legal Issues

In recent years, international financial derivative transactions develop on large scale and its rapid development puts forward many new problems and challenges to law research. Because of the virtualization and high risk of financial derivative transactions, it is important to control the credit risk in transactions effectively. The parties of the transaction can secure the trades through two methods in the structure of legal documents issued by International Swaps and Derivatives Association(ISDA): the Credit Support Document and the Guarantee which is provided by the third party. ISDA Credit Support Arrangement is suggested uniquely, and possess the intense characteristic of Anglo-Saxon Law. It plays a big role in financial derivative transactions. However the market of international financial derivative trades is just underway in our country, the relavant legislation can not meet the needs of practice and need to be perfected urgently. So the analysis of ISDA Credit Support Arrangement have profound significance in present. This thesis is trying to discuss the validity of ISDA Credit Support Arrangement in different law system, and this discussion will proceed in the frame of legal documents issued by ISDA, with the hope of this subject will raise attention from scholars for building collateral arrangement of international financial derivative transaction in our country.This thesis includes four chapters. The openning chapter gives a general overview for international financial derivative transaction and ISDA legal structure, such as the definition of financial dericative transaction, the main classification, the structure of ISDA legal documents and so on. Especially, this chapter includes the analysis of financial derivative transaction's legal characteristics and sample mode of the transaction, which can be the foundation of following chapters.The second chapter talks about ISDA Credit Support Arrangement, including it's content, provisions and the design of it's system. On the basis of that, author try to conclude the features of ISDA Creidt Support Arrangement, hoping this chapter can provide a clear account of ISDA Credit Support arrangement which can be understood easily.The third chapter analyzes the basic legal problems for credit support arrangement of financial derivative transaction. On the basis of the two major categories of credit support document, this chapter expounds the validity and other problems of Security Interest Approach and Title Transfer Approach in Anglo-Saxon Law System and Civil Law System, which is represented by English law, New York law and German law respectively. This chapter is aslo the one of the most important content of this thesis.In the last chapter, the author is trying to building the collateral arrangement of financial derivative transaction in our country. Considering the relevant regulation of Collateral Law and Insolvency Law in our country is not consistant with ISDA credit support arrangement, the author analyze the validity of ISDA credit support arrangement under Chinese law and the feasibility of bringing ISDA credit support arrangement into line with traditional theory of real rights of security, and then propose to build collateral arrangement for financial derivative transaction in our legal system on that basis.