The Legal Dilemma Of The Basic Asset In Credit Asset Securitization

Asset Backed Securitization(ABS) starts late in China, but it is developing rapidly and on a growing trend. Credit asset securitization is currently the major force of asset backed securitization in China. It is a kind of beneficiary certificate based on the credit asset that is transferred through trust by the financing institution serving as the initiator. The “true sale” of the basic asset is the core in asset securitization, the key to “true sale” is the negotiability of the basic asset, and that the basic asset can produce predicable steady cash flow in the future is the premise of securitization. The selection of basic asset is significant to securitization. While the current research of securitization is mainly about the process of “true sale”, the legal difficulties that the credit asset securitization encounters have not been deeply analyzed. This problem should have been attached significance to. Focused on the credit asset securitization practice in China and based on the relevant law and regulations, this thesis studies on the legal issues with regards to the chose and transfer of the basic asset. It contains four parts:In the first chapter, the basic principles of asset securitization and the transaction process in our credit asset securitization is discussed, and the status quo in China and the relevant legislation is introduced. The conception and the nature of the "assets" in the asset securitization is also introduced, and the nature and kind of “credit assets” is discussed. This chapter paves the way for the study hereinafter as the design process of credit asset securitization is the groundwork of this thesis. As to the legal obstacle to the development of the trust type credit asset securitization in the current legal context, it is discussed at length in the second chapter to the fourth chapter.In the second chapter, the required characters of credit asset for securitization is analyzed and the limitation of financial claim is demonstrated. The structure in securitization should be designed to facilitate the transfer of the basic assets, and the legal restrictions and contractual restrictions for the transfer of the credit asset is also analyzed in this chapter.In the third chapter, the basic assets in the trust structure is specifically analyzed. Trust is the mechanism to isolate risk in the credit asset securitization of China. When setting up a trust, the right of set-off, mortgage, revocation and other relevant rights should be considered. How to transfer the collateral right and interests should be attached emphasize.In the fourth chapter, the feasibility of “future claims” in the asset securitization is specially analyzed. With a comparative analysis of the legislative practice in Germany and the United States, the significance of the “future claims”, its legal limits and the proposal to improve it is all analyzed in this chapter.Then this paper summarizes the viewpoints of the questions above and put forwards the idea of uniform and specific legislation for the further development of credit asset securitization. The paper also provides some practical suggestion on the utilization of the internet to enhance the efficacy of credit asset securitization in our society.