The Stock Market Investor Protection Legal System

The theory of investor protection has always been a core issue during the formation of security market all around the world. The legal system of a country can have direct impact on the protection of investors, and furthermore, on the equity structure and corporate governance of a company, or even on the development of the financial market and national economy. As economic globalization intensifies, financial securitization and liberalization have become increasingly influential. With gradually blurred differences of businesses among financial institutes, such as banks, securities agencies and insurance companies, a trend has been set that governments in the world now adopt a unified regulation system to govern the security market, or even the overall capital market.Despite the fact that China's security market started late compared with those in other countries and related legal regulations to protect investors had not been well established, the scale of China's security market is no smaller than those of developed economies such as the U.S., Europe and Japan, thanks to China's economic boom during the recent years. As China's economy continues to hum up, more investors will turn to the Chinese market. However, the absence of basic regulations in the legal system to protect investors can hardly meet the needs of the bullish investment market. Without a unified and comprehensive legal system and a specific regulatory institution to protect investors and address legal issues, China still adopts a traditional model supervising different industries with different regulatory boards. As a result, violations in the security market have been frequent, and the legal rights of investors cannot be secured.Starting from the theory of investor protection, this paper introduces existing research results of legal regulations to protect investors, and analyzes the significance of investor protection to the development of the security market, and even the entire economic system. Followed by the summarization of regulations in terms of investor protection in some other countries and the reasons behind it, this paper draws upon useful practices for China's own reference. Last but not least, this paper points out the shortcomings of China's existing regulations of investor protection, and analyzes its reasons, and contributes related solutions and suggestions to strengthen China's investor-protection legal system. This paper holds the view that it is necessary to formulate a unified legal system and establish a designated institution to conduct unified regulation on the security market, so that investors'rights can be better protected and China's security market can enjoy a healthier and better development.