Risk Control With Securities Lending Transactions By Law

As Securities lending transactions are playing an important role in modern securities market, there is a trend for securities legislations to control risk more strongly for those market participants exposed to risks, such as securities companies, securities lenders and securities lenders and securities borrowers. With the growth of securities lending transactions in China, we should control risks with securities lending transactions by law.The paper bases on the types and sources of risk, takes the overseas research achievement and legal experience as references, starts with the developing course and demand of China security market in order to break through the traditional method to discuss risks control from the main aspects of economics and finance and construct a comprehensively legal control system of risks presented in securities lending. The measures to control the risks by law are as follows: firstly to set up the security financial companies to offer credit; secondly to perfect the supervising system including external supervision and self-discipline; furthermore to enhance the qualification examination to security companies, investors and target securities; finally to establish sound systems of margin account management, contracts standardization setting, the public disclosure of information, margin performance bonds, the uptick rule and the zero—plus tick rule, regulation on credit limits, ex-rights disposal, risk fund and so on.To construct legal control system of risks of securities lending transaction, it should not only prevent an over high security responsibility from affecting the efficiency of market, but also control effectively to a certain extent to avoid the crash of securities market, consequently, to defend the legitimate rights of investors. Above all, the ultimate goal of risk control system of China is to control the risks of Securities lending transactions, make sure of the positive effects of Securities lending transactions and finally facilitate the development of securities market.