Research On Margin Trading In Chinese Securities Markets

Margin Trading is the basic foundation for securities markets. It is a mature trading system in overseas securities markets. Margin trading is an important means for perfecting mechanism of securities markets, promoting financial product innovation, and optimize the allocation of resources in financial markets. It can increase market liquidity, buffer market fluctuations, help form reasonable prices, hedge risk and help institutions to create profits. Timely introducing margin trading on Chinese securities market has important practical significance for the development of securities markets and financial markets.Firstly, the paper explains the concept of margin trading in securities markets, its connotation, characteristics and functions. It has comparative study on margin trading system and history in overseas mature securities markets, and summarizes the three modes: the marketization modele in the United States, centralized distributing mode in Japan, and of mixed mode in Taiwan. Secondly, based on comparative analysis of the three basic modes, it is considered that the Japanese model conforms to China's reality. According to Chinese markets environment, legal environment and credit environment, securities financial companies shall be established to realize the refinancing of funds and securities. Thirdly, the important significance and conditon of adopting margin trading is analyzed. It is proposed that financial companies shall be established. Last but not least, risk management and supervision for magin trading is analyzed, and some countermeasures are put forward.