Choice Of Capital And Security Financing Method For Margin Transaction In Chinese Security Market

Margin transaction is a mature system widely adopted abroad, based on which the basic functions of security markets could work smoothly. Margin transaction has some active effects such as advancing market liquidity, mitigating market volatility, forming reasonable prices, hedging the risks and making profits for the institutions. It is an important way to improve market mechanism, push ahead the products innovation and promote the resources reasonable disposal. It makes great sense to take up margin transaction at the right moment for our security and financial markets' development.The security market in China is on the emerging and reforming stage. Market capacity is expanding rapidly and relative regulations are bringing to force step by step. The development has not only aroused the potential needs of margin transaction, but also promoted the reformation of laws and regulations. New Securities Law and relative rules were published before long which made the preparation for the policy of margin transaction, the market basic condition has comparatively matured, margin transaction would be put into practice in the near future. Which route to choose is the first and foremost problem to solve, and is also the focus in the theoretical research and practical operation areas.The paper analyzes the actual condition of our financial market to build up margin transaction system, and then compares and researches four kinds of typical routes abroad. After that, it brings up the point that we should adapt the method that securities clearing and settlement institution acts as capital and security financing media because it fits in with the development tendency of margin transaction and represents the feature of central-governing. Furthermore, it has the advantages of low costs, high efficiency, study convenience and spaces for innovation. At last, the paper discusses how to build up and carry out the margin transaction system.The paper mainly comprises four parts.Chapter 1 introduces the theoretical background of margin transaction, including the basic concept, typical routes and the present situation of researches internal and abroad.