| I An outline on Margin TradingSecurities margin trading is a kind of trading form that the customer at business stock pays the cash of certain percentage or securities to broker when he is buying or selling stock, its difference in amount part is fully made up by broker or bank loan.Securities margin trading cannot get away from securities financing, securities financing contains three main types: the primary market financing, the secondary market financing and securities mortgage.The main form of the secondary market financing is margin trading. Securities margin trading is divided into financing and short-selling. Securities margin trading show several obvious characteristics to buy stock with borrowing money and stock. There are dual reputations in securities margin trading.On the one hand, the broker and customer form the reputation relationship between them because the broker faces customer's advanced money. On the other hand, the bank and broker form the reputation relationship between them because the broker proceeds the stock collateral loan to the bank. Securities margin trading has dual interest pays, they are the interests that the customer pays to broker and broker pays to financing organization. It regards spot transaction as principle. This kind of bargain method is basically in accordance with the spot transaction from the way of delivery. The cash deposit percentage of securities margin trading is established by National Central Bank. National Central Bank can regulate the quantity that the bank funds flow into the stock market by adjusting cash deposit percentage according to the condition of the stock market's movement so that it can play the role of controlling the movement of the stock market and preventing the excessive motion in stock price. Margin trading has two basic ways: bull margin of cash deposit and bear margin of cash deposit. II The History and Condition of Foreign Margin Trading Foreign margin trading has a very long history. At the beginning of 17th century in Amsterdam, Holland, bull and bear activities appeared when stock appeared and started to trade because financing and short-selling is very important for the market movement. The three representative countries in securities margin trading history are America, Japan and Taiwan. The development process of American margin trading is basically a process that evolved continuously and tried mistakes continuously then acquired plentifulness and perfect. The Japanese current securities margin trading has passed by a long period of time. From the standpoint of the broad sense margin trading, Japanese margin trading system from 1878 to 1978 --- the recent revision passed by a long hundred years history, during this period, there were three important interval of system changing: periodically clear up account bargain period, the borrow bargain period, margin trading system period. Taiwan margin trading system and the process of the evolution of the structure can be divided into five stages, one by one in order for: the routine bargain period, the bank dealing with margin trading period, Fuhua securities financial company exclusive carrying our period, both Fuhua and securities carrying out double tracks period and open financial securities founding period.III The Condition and Causes of "Margin Trading" inOur Country's Stock MarketWe prohibit margin trading definitely, but securities and investor often take the secret margin trading activities based on the drive of benefits. Margin trading is forbidden but it still exists, the supervision usually checks on leaking ten thousand. The reason is that people pursue the highest profits of stock market investment and lower cost of entering Chinese stock market.IV Stock Market in China Needs Margin Trading There are several functions to develop margin trading in stock market: investors can use a little amount of funds to take a big stock buying and selling. "With small for great" in order to acquire bigger lever effect. To stock company, star...
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