| Margin trading, as one kind of security credit trading, originated from Dutch in 17th Century and got matured in America's 20th Century. It effectively establishes the links between capital markets and monetary markets, makes short selling as an tool of investment and fosters rational investors. At the same time, it can improve the current circumstance of broker and broaden the channel from which banks use their capital to participate in the capital markets. So the trading itself will show its function in bettering the needs of markets, controlling the fluctuation of price and satisfying investors'requirements. Margin trading has already operated in China since March 31st, 2010.Relative complete law hierarchy on Margin trading has been provided in China: Security Law, Administrative Regulation on Margin Trading, Detailed Rules on Margin Trading and Necessary Article on Margin Trading. An order of margin trading includes three kinds legal relationship: delegation, loan and guarantee. Delegation is the premise; loan is the basis; while guarantee is the core which stands on the summit of pyramid. Only fully using and depending on the guarantee model, can the margin trading protect the benefit of the partners, keep the capital markets'steady and get the markets'safe and boom. Also, it is the discussion center of this dissertation.Now in China, the guarantee model in margin trading is trust. The investor is trustor, the broker is the trustee and they two are beneficiary. Independence of trust property endows trust the function of asset partition. However, the original purpose which is to use trust to endure the burden of guarantee in margin trading has been impeded. The reasons are that the broker is not qualified to engage in trust and interest conflict resulting from the broker's identity as creditor is difficult to mediate.In order to resolve the problems on the guarantee model in margin trading, constructive suggestions have been put forward. We can use alienation guarantee because its distinctive legal structure conforms to the transfer of money and securities in margin trading. We can use charge over project accounts because a sealed system built by accounts system in margin trading will take the problem away in some extent. Declaration of trust can be used because its unique form will clear the guarantee legal relationship better and avoid the conflict caused by broker's identity. Pledge at maximum amount has already been regulated in Property Law and this way can be used for guarantee.There are four choices to be considered to figure out the problems of guarantee in margin trading: alienation guarantee, charge over project accounts, pledge at maximum amount and trust including general trust and declaration of trust. Of course, there will be just one model of guarantee in margin trading. Meanwhile, related conceptions in law and economics such as transaction costs, maximum and efficiency are taken to analyze the model mentioned above. At this step, general trust stands out. Then the same method is used again to analyze the different ways of general trust holding the main problem of present guarantee model. Introducing trust company and establishing unilateral trust is the last winner.The clue of this dissertation is introduced above. Besides, the method of explaining and comparison, the perspective of history and law-economics are systemically applied in this dissertation when illuminating to provide the right way to resolve the problems the present guarantee model in margin trading meets.
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