A Research On The Exit-market System Of Securities Companies

The exit-market system of securities companies is a series of procedures for revoking the securities companies' licenses for any causes. From 1987 when we established the first securities company to 2002 when the Securities Regulatory Commission imposed the sanction of revoking license on An-Shan Securities Company for the first time, in the long period of 15 years, there is not a single securities company had exited from this market, even though the whole industry had experienced several times of bear market. It is more and more obvious that many firms had been using customers' free credit balances as their own working capital. The function of market has been seriously affected by Administration. In order to improve the whole market and to protect investors' rights, we should establish the exit-market system of securities. Generally speaking, there are two ways for securities companies to exit from the market. One is bankruptcy; the other is close-down. Going bankruptcy means that a securities company can't fulfill a mature debt and can't be liquidated through a series of statutory proceedings either. Close-down is usually caused by revoke orders, merger and decisions of shareholders. Although the rules about the exit-market system had been existed for a long time, the use of them was none until 2002 and seldom in last three years. One of the reasons is the lack of feasibility of the existed rules. Meanwhile, the abuse of the administrative power hinders the function of the system substantively. So it is necessary to establish the bankruptcy and close-down system of securities companies, especially to set up the securities investor protection fund and to restrict the administrative power to law. In order to obtain a wider and more practical cognition on the approach to establish the exit-market system of securities companies, we should analyze the impact of the exit-market system on some related parties.