The Legal Supervision Of Asset-based Securitization

Recently, China's economy has gradually changed into the state of economic structural adjustment and transformation. In order to promote the asset securitization with a regular development, some beneficial policies and conditions have been put forward by the government. Additionally, some advantages of asset securitization, such as off-balance-sheet financing and increased asset liquidity, are able to satisfy initiators as their necessity of cash flow could be satisfied. Therefore, the business of asset securitization are rising dramatically and intensively in China.A boom in asset securitization development has provided some new channels and ways of investment and financing for market subjects, and the multi-level of capital market institutions has been enriched in China. However, risks are the fellows of opportunities, and there are some potential risks about securitization on the process of rapid developing, since they are lack of matched controlling mechanism and supervising measures. The systematical risk of financial market will be occurred if the risks happened intensively, because the scale and amount of financial market has been changed so amazing.Foremost, by combing the current situation of the asset securitization, the author reconsider the potential risks and the present model of supervision and point out the urgent need of completing legal supervision on the boom of securitization. And then, by combing the present rules and practical cases which belong to Chinese asset securitization, the authors indicates there are some legal supervising barriers that exist in China's asset securitization, namely, the suitability of basic asset, the legal deficiency of SPV's subjects, the dilemma of realizing isolation of risks, the incomplete of credit evaluation system and the imbalance of regulations and rights of people who are involved in the asset securitization. Moreover, by taking the specific supervision of asset securitization in Taiwan and America as references, the author is likely to put forward some suggestions about supervising barriers on the process of Chines securitization, including making the list of basic asset which is unsuitable to securitization, completing SPV's model so that the risks can be isolated, assuring the criterion of asset transformation in order to against third persons, optimizing the credit evaluation system so that the systematical risks can be controlled and by introducing the mechanism of liability so that the post supervision could be enhanced.