The Trust Asset Securitization Legal Issues

Asset securitization is the most dynamic financial innovation since 20 century 70 years, and its special purpose vehicle (spv) mainly includes corporate, trust and partnership type. Among them the trust type and company type are adopted widely all over the world. However, in the existing legal system in China, the trust is the only asset securitization operation mode. Asset securitization trust involves the basic theory of asset securitization and the basic principle of trust, and it is that the principle of trust is applied successfully in asset securitization. The asset securitization in china has many institutional deficiencies because of constrained by the current legal system that is not perfect in china, therefore, it is urgent to further perfect the relevant legislation to promote its development in china.The basic theories of asset securitization mainly include the legal definition of it, the trade structure and the most distinctive risk-remote institution. The legal definition of asset securitization theoretically reveals the legal essence of asset securitization, the trade structure that includes participation parties and operation process is the basic framework of asset securitization, and the risk-remote institution is the quintessence of asset securitization. The trust is a device for administering properties with the long-term planning function. The trust became the best SPV of asset securitization because it has some unique characteristic that agree with the intrinsic request of risk-remote institution in asset securitization. With the establishment and perfecting of the legal system related to asset securitization, china has established the asset securitization trust type. But the asset securitization trust of china has still many institutional deficiencies, and need further perfect the legislation in asset securitization to perfect the system of laws and regulations of china in asset securitization trust and to provide a solid legal system for the development of asset securitization trust in china.