Study On How To Reform And Improve Depository System Of The Customers' Transaction Settlement Funds In Chinese Securities An And Exchange Act

Since China securities business establishment, the stockbroker embezzling customers'transaction settlement funds is listed the head of three"original sin"of Chinese securities business. A large amount fund gap which formed by securities company embezzling behavior resulted in many securities company closing down in 2002, So People's Bank of China provided central bank lending ,61.7 billion Yuan for purchasing individual claim. Therefore the supervisor initiated a comprehensive program to regulate securities business, in this program, first task was the reformation of depository system of customers'transaction settlement funds. This article focus on third-party depository (customers'transaction settlement funds are deposited in the commercial bank.) which prescribed in Securities and Exchange Act 2005, and discusses how to prevent stockbrokers from embezzling and to safeguard customers'transaction settlement funds by improving depository system.The article is composed of the introduction, the main text and the conclusion and the main text divides into three Chapters:ChapterⅠelaborate the reason that reformed the depository system of customers'transaction settlement funds, ie why reformed? After demonstrating the phenomenon of stockbrokers embezzling customers'transaction settlement funds, the author analyzes the reason that Chinese stockbrokers had embezzled customers'transaction settlement funds. China securities business adopts 100% initial Margin and two-step settlements, which offer a convenience of embezzling. Further, many reasons result that embezzling risk is incontrollable, such as weak securities company internal control, the ownership flaw of customers'transaction settlement funds, the narrow channel of securities company financing, the lack of Outside inspection independently and efficiently.ChapterⅡdemonstrate the reformation experiment and existent questions in the depository system of customers'transaction settlement funds. Briefly reviewed the correlative reformation, especially separate-account depository system that be applied before Securities and Exchange Act 2005, but separate-account depository system couldn't avoid the system limitation that stockbrokers embezzled customers'transaction settlement funds, so the third-party depository system is established when Securities and Exchange Act is revised in 2005. After introducing the legislation and design of third-party depository system, the author consider although it achieved success temporarily, third-party depository system isn't the ending of reform of customers'transaction settlement funds depository system Chinese. The reason is that it lacks the foundation of "safeguarding customers'transaction settlement funds not be embezzled", stockbrokers can't gain the interests that is produce by the principals, it doesn't conform to settlement of DVP, it restricts the development of securities business,it hinders practice of credit deal, it is mismatched the bank technical system. Thus, we ought to start new study on how to improve depository system of customers'transaction settlement funds and to secure the fund owned investor.ChapterⅢpropose the suggestion how to improve the depository system of customers'transaction settlement funds. The author considers the value-orientation is that the safety of customer'fund, and balance the fund safety and securities exchange efficiency, after introduction and analysis of two pattern, ie the stockbrokers- depository representative country is USA and the third-party depository typical example is Taiwan, South Korea. Concerning how to improve Chinese depository system the author's suggestion is: we ought to base on stockbrokers-depository, Adopts trust theory for independence of customers'transaction settlement funds, Strengthens the internal control system of securities company, monitors strictly to securities company, Opens up the financing channel of securities company, Improves Chinese Securities Investor Protection Fund as final protective measure of ensuring customers'transaction settlement funds.