Research On Risk Control Of Margin Trading

Margin trading broadly exists all around the world, but it had not received legal status in China in a long time. Since the implementation of the revised"Securities Act,"which legalized margin transaction, China Securities Regulatory Commission promulgated the"Margin Financing and Securities Lending Services of Securities Firms on Trial Basis"on July 2nd, 2006, and pilot preparation work of pilot securities margin financing has begun to operate. Margin trading is a high-risk type of investment, and all countries are emphasizing on monitoring its risk. In this paper, by analyzing the characteristics and risks of margin trading, combined with different risk control systems according to various models of transaction in foreign securities markets, it envisages the trading model that suits the actual situation of China's securities market, in order to structure the risk control system of China's margin transaction under that trading model.This article is divided into four chapters, and the main contents are as follows:The first chapter is an overview of the transaction risk control of margin financing in China. By comparing the securities credit trading and margin trading, it analyzes the characteristics of credit in margin transaction and clarifies the mechanism of margin transaction. And on this basis, it briefly analyses the legal relationship of margin transaction, emphasizes on analyzing the controversial security legal relationship, and makes a conclusion of considers it as a legal relationship of trust. Then it briefly analyzes the necessity for the risk control in margin trading, which serves as preparation to build China's risk control system of margin transaction in the following chapters.The second chapter is about the risk control of margin transaction under different models abroad. This chapter mainly introduces and analyzes specific risk control systems under the marketization model in the United States, the intensive credit model in Japan, and the double-track intensive credit model in Taiwan. It draws a conclusion that China should choose appropriate trading model according to its actual situation and build reasonable risk control system under that trading model.The third chapter elaborates the current situation of margin transaction in China. From the perspective of risk control, this chapter analyzes the current situation of margin transaction in China's securities market and risk-control-related requirements in"Margin Financing and Securities Lending Services of Securities Firms on Trial Basis"and other legal norms. Finally, combined with China's situation, the author makes a vision of China's future margin transaction pattern.The fourth chapter is about building risk control system of margin trading and securities lending in China. In this chapter, it firstly structures the suitable margin transaction model for our country, that is, financing with moderate marketization financing model, and securities with centralized credit model. Under the proposed model, it also specifically analyzes various risk control systems, the regulatory system at first, which is the most important, followed by the certification system, which is a prerequisite for margin trading, and then from the perspectives of various stakeholders in the market, specifically analyzes the risk control systems for investors, securities companies, securities market, and financial institutions.To sum up, margin trading system is a high-risk system, and the author hopes that through the vision of transaction model and specific suggestion and analysis towards risk control system, this thesis could help offer some useful suggestion.