Margin Regulation Legal System

Shorting and margin financing are two important forms of securities credit transactions. Investors with diversified needs gain investment funds or securities from securities companies and other financial institutions, use the lever of credit and move the stock of capital securities of financial institutions to finally influence the market supply of funds and stock throughput scale. At the same time, these kinds of credit transactions also increase revenue while preserving and increasing the liquidity of the stock market and finally promote the development of the stock market. Based on the essential role played by margin financing in the stock market, the securities credit transactions represented by it have been popularized world-wide. In 2008, under the U.S. subprime mortgage crisis, credit leverage, stocks short selling and other innovative financial tools was brought to the cusp and was been focused on by regulators with careful reflection and supervision. In 2010, as the international financial crisis was still not over yet, China started the pilot operations of this innovative shorting and margin financing, which no doubt provided a high regulatory requirement for the regulatory authorities.In this paper, the basic theory of margin regulation starts by introducing the necessity of margin financing. Combined with the lessons and experiences of outside monitoring of margin financing in developed countries, this paper will also analyze the current imperfect and reasonable places appeared in the process of monitoring the pilot margin financing legal system, and thus give some corresponding proposals. In order to consolidate the basis for regulation of margin financing, in the first chapter of this paper, I aim to outline the basic theories, such as some basic concepts about margin financing, the introduction of the margin financing history as well as the concerning legal models. On the other hand, the first chapter also described the theoretical basis of real need of regulation in the process of margin financing.Chapter II first summarizes the regulatory status of the legal system constructed by the pilot margin financing and based on that, it analyzes the current system and the pilot practices and they match each other in the extent of the special conditions in China. After full argument, this chapter tries to examine the problems and shortcomings occurred in the current margin regulation legal system and point out four issues, including the legal vacancy, lack of the main linkage mechanism of supervision, imperfect regulatory content requirements and imperfect blank provisions of legal liability.As for the problems described by the second chapter, Chapter III provide corresponding remedy one by one and try to propose some recommendations to improve the monitoring of our existing margin legal system. In the process of constructing solutions, in order to better achieve the effective regulation of margin financing, the experience learned from foreign margin financing in developed countries can be integrated with the regulatory strategies of relevant international organizations in the current international financial crisis. In order to improve the legal effect of the proposed legislation, the legal levels of margin regulations should be improved and specific executing ordinance should be layed out; For the purpose of effective monitoring, I also point out that we should enhance the linkage and strengthen the coordination between main regulation bodies and expand the scope of regulators. In the aspect of trading system construction, it is proposed that it's necessary to expand the scope of subject participation to be effective, build refinancing mechanism, improve the guarantee system, expand the scope of underlying securities and strengthen credit management. On the aspect of improvement in terms of liability, this chapter put forward the need to increase the margin of the criminal provisions.Finally, I will list the wording thread as the conclusion of this paper.