The Legal Control Institutions On The Credit Risks Of Securities Settlement

Since China securities market is established, the securities settlement system has developed greatly. It plays an important role in protecting the security of the securities market in order to operate smoothly and efficiently. However, during the special period, the securities settlement system has met a lot of challenges. The most obvious problem is the uncompleted securities settlement system and related statutes. As a result, the unignorable credit risks of the settlement system exists. In the recent years, some stock dealers'credit risks broke out concentratedly and moved to the settlement system, which has show the limitation of the securities settlement system. Under such circumstance, how to improve the control system on the credit risks of securities settlement is got more and more people's attention.This paper, combined with the information of the law and the finance, focuses on the related legal control system on the credit risks of securities settlement. Also it uses the comparison analysis method, the history analysis method and the law interpretation method. This paper analyses the credit risks in China securities settlement, adopted the advice of the international organization and the experience of developed countries. The most important thing is that it discusses the central system of perfect control system on the credit risks of securities settlement. Finally , this paper analyses control system on the credit risks of securities settlement in China today, and gives the advice to the improvement.This paper consists of five parts.Part One generally discusses the back ground of the credit risks in securities settlement. The purpose of this part is to provide a technical background . According to the introduction of the securities register, holding and settlement system, the paper analyses the securities holding and settlement system of China.Part Two of the paper discusses the credit risks in securities settlement and its control system. This part expatiates on the cause and the presence of credit risks in securities settlement in China,and introduces the legal system of the developed countries'on the credit risk control. At last, the paper sets up the legal system on the credit risk control in China from three aspects.Part Three of the paper discusses generally the management system of settlement members according to the admittance and risk management. This part of paper claims that the improving management system of settlement member is good for the credit risk evaluating, forecasting and controlling of the settlement system.Part Four of the paper is the keystone, it discusses generally three basic systems in credit risk control. They are the Central Counter Party(CCP),Delivery versus Payment(DVP)and Settlement Guarantee. This part of paper expatiates on the theroy of each system , contrasting the relative legal system of the developed countries with China, and gives the advice to the improvement.Part Five of the paper makes extension of Part Three and Part Four. It discusses the treatment after the credit risks breaks out. This part expatiates on the treatment to the circumstance which settlement member's breaches the contract and becomes insolvent It also analyses the problems in the judicatory execution on the property in the settlement of China, and gives the advice to the improvement.