The Study Of Legal Risks On The Asset Management Plan Of Securities Companies

The breaking out of the subprime mortgage crisis in2007has provided us the perfect opportunity to dig deeply inside the topic in terms of asset securitization products to draw useful reflections for the development of Chinese market. Compared with complex and multi-derivative asset securitization products, for instance, COD, the special assets management plan products issued by securities companies belong to the category that the targeted assets connect directly to the securitization products. This kind of product match the current Chinese market requirements in respect of fundamental types of assets, product structure, risk characteristics, liquidity arrangements and information disclosure. The published 《Regulations for Asset Securitization Products from Securities Companies》from the China Securities Regulatory Commission is viewed as a new carrier of the development of asset securitization products, which can help to push this industry to a higher level. However, the securities companies still have to deal with problems derived from the slowing down of reforms on the Chinese financial market and regulations for their special assets management plan products. The special assets management plan products have not been clearly defined its legal relationship, which means weather the claim rights, a new form of property right, can be produced through securitisation has not been settled. Meanwhile, the examination and approval process by the China Securities Regulatory Commission also hugely impede the development of asset securitization products in China. Therefore, it is crucial to thoroughly analyse this risks facing in front of the regulations for special assets management plan products from securities companies, and then provide practical solutions.The novel part of this article is the focus on the special assets management plan products with high uniqueness among all the assets securitization business. In addition, typical cases are analysed to help understand the current problems of this business better.The main body of this article includes four parts.Part1. The definition of special assets management plan products issued by securities companies in China focusing on the comparison between assets securitization by securities companies and credit asset securitization by credit companies. Next, the introduction of new rules for assets securitization and the trading processes for special assets management plan products are presented.Part2. This part places emphasis on2huge flaws of regulations for special assets management plan products from securities companies. Under the current Chinese legislation framework, special assets management plan products are defined as principal-agent legal relationships. However, the composer of this article regard the legislation of trust relationships are more proper for assets securitization products within all the current assets management legislations. On the other hand, the lack of future claim right in legislation may cause problems for special assets management plan products.Part3. Case study: Far East Leasing two-stage assets securitization special plan. Legal question analysis in terms of bankruptcy isolation, true sales and so on.Part4. Based on the above studies and analysis, suggestions for assets securitization special management plan are presented, along with the double SPV trading processes model. Besides, the suggestions also includes the improvements on functional supervision and trust legislation.