The Risk Of Isolation Of The Asset Securitization In China

Risk-remoteness is the core institution in asset securitization, namely the existence of effective and low-cost risk-remote mechanism detennines the survival and prosperity of asset securitization. The author, based on a thorough study on business and legal concepts of asset securitization, tries to understand the core characteristics of asset securitization; based on a study of its historical development, to understand motives and their corresponding institution requirements of asset securitization; based on the above study, to access the status and facilities of risk-remoteness in asset securitization. Special purpose vehicle ( " SPV " ) is not necessarily the single institution in achieving risk-remoteness, and transfer, trust and security are alternatives. The popular view of domestic academia holds that SPV is essential in risk-remoteness, and to some degree, SPV equals to risk-remoteness. However, asset securitization, as a legal institution, has a strong local feature in its institutions and facilities, is closely interweaved with host country' s legal system, and can not be mechanically transplanted from a different country. Take the USA for example, its security and bankruptcy institutions can not effectively isolate the proposed securitized assets from the organizer' s assets, and SPV is adopted to achieve the isolation. The effective protection of guaranteed rights of priority rights in bankruptcy law in our country, could be seriously jeopardized by re-organization institutions, thus priority rights institution can not meet the risk-remote requirements of asset securitization, and we still need SPV to achieve risk-remoteness. The author studies SPV institutions in the USA, Germany, and China, and hope to take references from foreign countries to perfect our SPV institutions. The author finds SPC is not possible in contemporary legal system, foreign SPV is extremely difficult and complicated, and the most possible SPV form is SPT. However, there are big theoretical and practical constraints in SPT, and we have to gradually adjust it.