Research On The Risk Settlements Of The Country's Securities Company

Since Shenzhen Zone Securities Company established in 1985, which represents the first of its kind in China, the country's stock market developed gradually with the ever-expanded quantity and enlarged scale. Against the backdrop of the emerging and transitional stock market, however, a string of problems and risks evolved in the development of securities companies. As a financial organ, securities company has the greatest characteristics which differ it largely from other companies--its risks can be diffused, enlarged and have social influences. Single or partial financial difficulty could easily turn out to be overall financial turbulence, even causes serious social problems. The causes of the high risk are also very complex. Different securities company has different risk degree and risk cause, so one shall adopt various settlements to each case. Therefore, we shall attach great importance to the risks of the Securities Company.China's stock market remains sluggish and its management environment worsens continually as of 2001. With greater efforts to adjust the market structure and deepen the reform, the accumulated problems and risks in this area exposed fully and erupted. In response to what had happened, the State Council has issued Some Opinions of the State Council on Promoting the Reform, Opening and Steady Growth of Capital Markets in February, 2004. These opinions identified guidelines and tasks for the development of the capital market, mapping out the overall planning and specific measures and demands to press ahead with the reform and opening up as well as the stable development of the capital market. According to the state council's overall deployment, Chinese Securities Regularity Commission started to overhaul the malpractices in the securities companies from August, 2004. Up to now, 30 securities companies have been shut down and substantial results have been yielded.At current critical juncture of the stock market's development, doing research on the risk settlement of securities companies is vital to improve relevant laws and regulations in this regard and means much to the current long-term risk-settlement mechanism both theoretically and realistically. This paper tries to analyze and compare the concrete settlements that suit different risk condition of different securities company, summarizing the application scope and settlement efficiency of each mode. In addition, this paper appraisals each way to settle risks and offers some suggestions to optimize the existing risk settlement mode in a bid to provide theory instructions to address risks steadily and orderly down the road.