Research On The Assignment Of "point-to-point" Lending And Creditor's Rights In The Network Environment

The assignment and the following securitization of P2P debt is the new trend in the UK and US FinTech industry,which encourage more institutional investors including traditional banks and other financial institutions to join the P2P lending market,which not only benefit the SMEs by enlarging the funding resources available but also protect the small investors.China is the world' s largest P2P lending market.However,several problems still need to be solved before the Chinese market witness its proper P2P debt assignments.First,China needs to sort out its security law system and clarify the legal concept of P2P loans.The existence of credit intermediary P2P platforms in China has disrupted the market and raised concerns of debt assignment in the Chinese online lending market.The debt assignment discussed in this thesis only refers to the process during which the debt-holders assign their rights to the SPVs for the purpose of securitization.Second,the debt assignment should be legitimated.While the legal system of China is facing a conflict between the law and regulations,the P2P lenders should still be aware of the legal risks of debt assignment and try to avoid such risks by excluding P2P lending platform from doing banking business.Meanwhile,a sufficient financial investor proception scheme and information reporting system would reassure the claims of the online debt.Third,Credit Enhancement is necessary during the assignment process to attract investors in the market as there is currently no secondary market to price the loans.But over-collateralization should not exceed a reasonable limit so that the credit assignment would be invalid.Also,guarantee from third parties should not be over used as it could raise the systematic risk of the Chinese financial market.As for the notification of the debtors,Chinese law recognizes the assignment as a contract between the creditor and the third party,hence the debtor should be notified.Currently,since the cash flow is controlled by the platform and the bank,such notification can be made directly from the creditor to the platform.