Study On Compliance Of Credit Enhancement Measures In Trust Business From The Perspective Of Rigid Redemption

Breaking the rigid redemption requirement proposed by the Guidance on regulating the asset management business of financial institutions in 2018 has its rationality,but "rigid redemption" itself is an ambiguous term,and a unified judgment standard has not yet been formed in financial regulation and judicial practice on whether credit enhancement measures violate the rigid redemption regulation.Therefore,public power should prudently intervene in the autonomous domain of market subjects’ intentions.It cannot be denied that the rigid redemption of financial institutions may indeed pose certain risks to the financial market,but this does not mean that a "onesize-fits-all" regulatory approach is the best answer.At the same time,breaking the rigid redemption of financial regulations cannot be done too hastily.The immediate implementation of strong regulatory measures may cause other negative impacts on the financial market.Therefore,the implementation of the policy should take into account comprehensively consider factors such as the macroeconomic environment,the development process of the trust business,and the transaction arrangements of business entities.The current financial regulatory policy in China clearly stipulates that trust companies as trustees may not engage in rigid redemption,but market entities have to create various credit enhancement measures to meet market demand.Therefore,regulatory and judicial departments should realize that credit enhancement measures are an innovation need of market entities,recognize their rationality and give respect.If breaking the rigid redemption of financial institutions cannot achieve the purpose of protecting greater interests,regulatory departments should be cautious about infringing on the autonomy of the parties and actively uphold the essence of freedom in private law and the soul of the market economy.Regarding the question of “how to judge whether credit enhancement measures violate the rigid redemption regulation”,this article proposes that the four elements of commitment subject,commitment content,commitment time,and beneficiary obtaining additional benefits should be used as a unified recognition standard.Then different credit enhancement measures should be classified and analyzed according to these elements.When judging whether credit enhancement measures violate the rigid redemption regulation,regulatory departments should change their supervisory concepts,return to theoretical foundations,respect business practices,actively improve the legal system of the trust business,and strengthen the cooperation with judicial departments.Chapter 1 first analyzes the regulatory policy evolution of breaking the rigid redemption in trust business from the implementation of the “Trust Law” to the present.Then it introduces the reasons for the emergence of rigid redemption in trust business,mainly including the lack of trust leading to dependence on rigid redemption,the ambiguity of the definition of trustee obligations,the administrative disposal of trust risks,and local governments’ pursuit of GDP goals.Chapter 2 mainly analyzes the basic relationship between rigid redemption and trust measures based on the current regulatory background of “breaking the rigid redemption” in China.Trust companies have created various and complex trust measures,some of which may be transformed into means of evading the regulatory policy of rigid redemption.Therefore,based on the historical evolution,reasons for the emergence,common types,basic classifications,basic principles,and legal nature of trust measures in trust business,the chapter analyzes the basic relationship between rigid redemption and credit enhancement measures,and finally sorts out the compliance requirements that credit enhancement measures need to comply under the regulatory policy of rigid redemption.Chapter 3 analyzes the issue that there is no unified standard for judging whether the credit enhancement measures violate the rigid redemption regulation in regulatory and judicial practices based on the analysis of cases.The reasons for not forming a unified recognition standard are analyzed.Drawing on the overseas experience on the rigid payment regulation and combining with China’s practice of trust regulation,the four elements of commitment subject,commitment content,commitment time and beneficiary obtaining additional benefits are defined as the unified recognition criteria.Chapter 4 focuses on classifying different types of credit enhancement measures based on the unified recognition standards established in the previous chapter.It proposes specific and actionable judgment methods to guide regulatory and judicial authorities,including defining commitment entities and distinguishing between internal and external credit enhancement measures,identifying the content of commitment and conducting thorough reviews of contract terms,determining the timing of the commitment and analyzing the effect of the rigid conduct,and examining the“beneficiary obtaining additional benefits”.Chapter 5 primarily discusses the construction of a compliance path for credit enhancement measures under rigid repayment regulation.It proposes that regulatory authorities should transform their management concepts,return to theoretical foundations,respect commercial practices,actively improve the legal system for the trust business,and strengthen cooperation with judicial authorities.