A Study On The Securities Brokerage System In China

This paper studies the brokerage system in China, including its current situation, deficiency and the need for further improvement. Based on the theories of transaction cost and efficient market, the paper probes into the long established brokerage business in securities of major developed countries. As an emerging securities market, China needs deadly to speed up the development of its brokerage system which is at its infancy. The experience in Western countries can be of great use in reshaping China securities brokerage business so that there will be strict rules regarding the relationship between brokers and their representatives, licensing, code of ethics and standard of professional conduct, as well as regulation of securities brokers.This paper falls into five parts. Part I deal with the general business of securities brokers and their behavioral characteristics, as well as the definitions for securities brokers and brokerage system. This part also traces the evolution of securities brokers in major markets. Part II analyses the contributions securities brokers make to the development of the market, particularly in reducing transaction costs, market fluctuations and raising market efficiency. Part III compares the brokerage businesses in major Western countries including the United States and Europe, which underpin the analysis of the brokei~age business in China. Part IV studies the current situation of securities brokerage in China and its major problems. Part V proposes what should be done to restructure the securities brokerage in China, and how reforming efforts are to be made.