Study Of The Legal System Of The Financial Asset Securitization

Financial-asset securitization is a process that the originator sales the illiquid financial assets, which can generate stable cash flow in the predictable future, to special purpose vehicle (SPV), through a certain structure, separating and reorganizing benefits and risks of the mentioned assets, and then those financial assets will be converted into some kinds of securities could be free traded in the financial market. In this process, SPV pay the price for the sale of assets to sponsor by securities sales, while pay investors the investment income from the future cash flow of the assets. Financial-asset securitization on international financial markets is an important financial innovation, changed the global financial structure and credit allocation patterns.Financial-asset securitization deals with a series of legal issues, such as relations between multiple participants, the determination of basic assets, the establishment and operation of SPV, the true sale, bankruptcy risk isolation, promotion of credit and gradation of credit, etc. Among which, the legal system of SPV, the true sale, bankruptcy protect and promotion of credit are key issues. There are no special laws about Financial-Asset Securitization (FAS) in China, and the existing laws and regulations have conflicts with securitization system. So, there are strong demands to reconstruct the legal system of FAS. Therefore, in order to enhance the development of FAS, protect the interests of investors and avoid financial risks, China must emphasize and accelerate the constitution of laws and regulations of FAS.This thesis has four parts. The first part introduces the basic concepts of FAS and their evolvement, the legal standard and types of fundamental assets suitable for financial-asset securitization, participants and general procedures of FAS, the significance and status quo of FAS in China. The relationship between the subprime mortgage crisis and securitization was also analyzed in the first part. The legal system of FAS has been studied in the second part. On the basis of analysis of the legal relationships of securitization, the second part elaborates the legal system of assets transfer, SPV, promotion of credit and gradation of credit, issuing and trading of securities, accounting and tax. The third part involves the status of the legal system of FAS in China, focusing on the existing regulations regarding the trial credit asset securitization. In addition, this part puts forward the legal obstacles about the conditions of FAS legal system. The fourth part tries to give some useful advice from aspects of legislation. We have to choose the special legislation model to overcome the legal obstacles of the development of FAS. Meanwhile, the fourth part comes up with the suggestion of the whole frame of the legal system of FAS in China.