Optimization Of The Securities Registration And Settlement Risk Analysis And Securities Registration And Settlement Patterns

This paper analyzes the risks of China's securities clearance settlements system and mode optimization. There is a general conclusion in my paper. Through a number of standardized integration in the operation and organization level, China's securities clearance settlements system has been basically in compliance with international standards, but risk control management level is still at a relatively low level. This system must be in accordance with the best international standards mode, and constantly optimize the mode of securities clearance settlementts, so that the risk of this system can be involved from the foundation.Securities clearance settlements system is the operating system which has closely linkage with stock exchange system. It is an important channel which transfers the risk in the stock market. The security in exchange system is restricted by the security model of clearing settlements system. China's stock market is a emerging capital market, which has many aspects of risk. The risk of securities clearing & settlements include credit risk, liquidity risk, systemic risk, cash & stock custody risk, registered & clearing account management risk, cross-border securities settlements risk, and the Central Securities Depository(CSD) management risk.Through analysis of clearance settlements optimization theory and standards publicated by the international settlements research institutions, assessment of settlement for comprehensive mode in part countries and regions, comparing different countries'national registration, clearance settlement mode in different projects, sequence situation of optimization level in international settlement for the most countries can be drawn. From these analysis, we can find a result ,that is,in the members of the World Bank and Asia-Pacific Central Securities Depository Group, China's settlements mode is at relatively at a lower level by general assessment, especially in risk control management which is in urgent need of improvement.As the new "Stock Act " introduced since 2005, China's clearance & settlement system has taken important improvement measures, such as settlement participants system, inverstitor margin third-party depository, stock account registration clearing, etc, which help to control the risk of registration settlement from a different perspectives. China's settlement system in accordance with international standards is devided into three-levels, which continue to improve aiming at the high international standards.The emphasis on risk control and mode optimization research is the specific analysis on the importance and realization way of Delivery versus payment (DVP) in China's settlements. The main reason of high risk in China's settelments system is that DVP ,which is an important settlement mechanism instantly, ultimately and irrevocable in most of countries ,has not been realized in China major securities. Also it is the critical delinquency for overdrafts broker (through brokerage overdraft case analysis) which thus cause settlement liquidity risk. This paper analyzes the way on the important settlement risk control mechanism in China from settlement mode optimization perspective. Establishing two-levels DVP mechanism can prevent principants risk effectively. Otherwise ,the replacement cost exposures are involved by collateralisation of participants and the scientific deduction voucher settlement solution. This is the most important mechanism in settlement risk prevention.Based on the control of settlement risk, study on the cost and efficiency of the cleariance & settlement mode innovatively. By the best model theory, safety, efficiency, cost are the interactional factors which have close relationship. International standards system is established and improved continually considering the fators which are high-security, high-efficiency and low-cost. Through the understanding on the international settlement system cost and efficieny sample analysis process and conclusion, studying China's settlement cost and efficiency, we can find high cost in China's settlement system, which do not meet the cost-effective interval proposed by international standard. As for the efficiency, because of the correct settlement way, China's settlement mode efficieny is relatively high on the whole.There are several innovative points for recommendations on China settlement risks control and model optimization .The one proposal is that by the analysis of the grim risk situation of the high risk participators involved in settlement, three methods can be provided on protecting the interests of investors .Those are sticking to direct upholding model in securities, inverstitor margin third-party depository, establishing an Investor Protection Act and orginizetion for investors. At same time ,to consolidate dynamic objective information in credit reporting systems, timely adjust risk prevention measures of settlement participators. Another proposal is to integrate the OTC market registration ,clearing & settlement systems, optimize allocation resources in multi-level capital market, improve the settlement efficiency, reduce settlement risk, and thus the establish and optimize a multi-level capital market settlement mode on the long-term development in China.