Research Of Several Legal Issues Of Refinancing Services In China

Refinancing services were officially launched in China in August,2012, which is a sign of the maturity of China’s securities market. But due to the low legislative level and lack of practical experience, refinancing services protrude three unsolved issues about the legal principle and institutional arrangements. Firstly, though securities financing company, the core subject of refinancing services in China, has been set as incorporated company, yet meanwhile plays the role of "not-for-profit", which arouses controversy. At the same time, it has been played both civil and administrative role, which also retards refinancing services development. Next, guarantee mechanism has been constructed on trust in refinancing rules and regulations, which cannot solve the problem on balanced interest allocation of joint beneficiary. Lastly, the system of compensated use of refinancing collateral has been introduced into the refinancing service creatively, the collateral will be faced with conflict between guarantee function and use function.This article embarks from straightening out legal relations and respecting the financial practice under the guidance of the orientation as the subject in economic law, affirms the "not-for-profit" role of securities financing company and explains reasonably that its multicultural duties can coexist harmoniously. Guarantee mechanism of refinancing services has a variety of disputes, including trust model, an alienation guaranty model, account pledge model and financial innovation model. By comparison and analysis of these model, the article concludes that the maximum amount pledge and refinancing guarantee mechanism are compatible in terms of both basic principle of law and explanation of special economic function. As the essence of compensation system of refinancing collateral will actually arise conflict between financial efficiency and financial security, and the use of collateral will inevitably damage the collateral value, the subject, scope, duration and cost and so on should be strictly limited so as to gradually correct the system and effectively control risks.