Margin Transaction Legal System Analysis

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,mitigation 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.Although the function and effect of margin transaction has been admitted by countries over the world,but the risk of the transaction will not be ignored.After establishment of China security market,margin transaction never be adopted by law.But in the wake of the development of the security market,high inner quality of the investor and stockjobber,reform of the regulatory system,the outer condition which will be in favor of launching the margin transaction has been satisfied,the adoption of the system will be necessary and has been approved by the most of the people. 2005,the new security law was issued,the margin transaction gained its legal status firstly.Soon after,a lot of laws,regulations have been issued,such as 'Securities Companies Margin Business Management Measures',Implementation Rules of Shanghai and ShenzhenStock exchanges,the legal system of the margin transaction is more and more perfect.But the margin transaction has not existed in China,we has no precedent in this area,so,it is better for us to learn from the advanced system of the developed countries,depending on the reality of china,seek for an appropriate system,adopt cautious principle,carry out the experimental transaction system currently.Although the regulator of security market has considered for introducing the system form abroad,there are lot of legal problems need to be resolved by law,the current law system must be reformed to coordinate with each other.Therefore,at the present stage,It is necessary to take research on margin transaction which will be applied to our security market,and establish relatively perfect transaction legal system.The paper has to three parts.the first chapter is about margin transaction theory.This chapter mainly talk about the basic legal system theory,and analyses the denotation and connotation of the system,the margin of the business process,basic principles and profit-making mode, the function and the risk of the system in detail.To illustrate that margin business itself is not terrible,the necessary regulatory and risk control of margin transaction are the most important thing to consider by the regulatory.The second chapter is about the legal analysis of the margin transaction.This chapter mainly analyzed the legal relationship between participants during the business process in-depth.Firstly,this chapter analyzed the main participants of margin transaction business in general as investors,securities companies,securities financial companies,also involves the underlying securities which is the subject of legal relationship of the business.Then,this chapter focused on analyzing the first level of credit legal relationship between securities companies and investors.It involves acting legal relationship,lending legal relationship,guarantee of legal relationship.Then this chapter analyzed the specialty of our marginal legal relationship under our mode of margin transaction,aimed at further standardizing margin transaction to solve various legal problems in the practice.The third chapter is assumption of margin transaction system.This is the key part of this paper,also the ultimate goal of writing.Firstly it analyzed the necessity of the introducing of the margin transaction and the conditions which we have been established and the necessary legal conditions for introducing the system,all of these show that our margin system is the inevitable outcome of the development of Chinese securities. Because of the great risk of margin transaction,such a effective stock market and the credit system is not perfect in China in this business,the key link of the system is the risk control.Therefore,This chapter focused on analyzing the relevant system of risk control of the margin transaction.Finally this chapter analyzed the supervisory system of margin transaction.