Securities Credit Trading Risk Management

Focusing on risk management, this essay makes horizontal comparisons on the commons and differences among the countries or areas of developed capital market, for example, the United States, Japan, and Taiwan in the respects of margin transaction mode, legal foundation, risk effect, risk management regulation, risk managing body and role, and the managing measures. Adopting the microstructure theories in financial market, stock market regulation efficiency theories, article guarantee principles, stock option mode and the related empirical research result, this essay summarizes the principal definition of margin transaction from the angle of credit; it clarifies the regulation function in margin transaction from the angle of securities transaction principles; it explores the options of margin transaction model from the angle of market efficiency; it analyzes the legal relations in margin transaction from the angle of security assurance; it evaluates the margin transaction risks from the angle of securities market and brokerage firms; it summarizes and analyzes qualitatively and quantitively on the risk management measures of the margin transaction and their effectiveness from the sides of scale and mechanism. Based on the above analysis, the author further summarizes the principal structure and the risk management system of China margin transaction. In response to the issues in the legal relations, model options, monitoring system, risk management tools, clearing and settlement regulations of China margin transaction, the author raises appropriate policy suggestions on how to improve margin transaction law system, clarify the transaction mode, strengthen the coordination and cooperation among regulatory authorities, cultivate and functionalize market adjustment mechanism, and to establish clearing and settlement regulations supplementary to margin transactions.