Securities Brokerage, Securities Company And The Customer Legal Relationship

Securities transaction is the holder of securities sells securities to another party. This kind of transaction is the most frequent, most active and most risky transaction on the capital market, and it is also the focus of securities regulation. The relationship between securities agency and investor is the most commonly seen relationship in this kind of transaction. However, the nature of this relation is hotly debated in history. Current laws and regulations and judicial practices tend to place it into agency transaction, while the dominant opinion in the academic community is that the it belongs to broker transaction. This sort of dispute makes it difficult to define the rights and duties of securities institutions. Furthermore, due to the lack of legal obligations in the securities laws in China, the victim is not expected to seek damage remedy from the securities agency.This paper examined the relationship between the investors and securities companies in an effort to give a definition of this relation , make it clear the rights and duties of both parties and how they assume their obligations and protect investors and form a robust capital market.Discussions in this article are demonstrated as follows:Firstly, I gave a brief introduction to the dispute and theories in both legal families and draw the conclusion that the agency theory in common law family is similar with the direct and indirect agency theory in the other legal family. Secondly, after I compared the broker and agency theories, I find out that the nature of the relation between securities company and investors is most similar with the broker system. Thirdly, based on my conclusion above mentioned, I examine the six specific rights and six specific duties of the securities company. Moreover, I discuss the duty of prohibiting securities financing and suppose an amendment to the securities law of PRC and to delete the sections of prohibiting securities financing.Fourthly, I researched the contract-breaking liability and the tort liability and the priority of them. After I research the contract law of PRC, I rendered my opinion on the damage remedy and the method to make sure the damage.Finally, based on the research above, in the part of conclusion I provided my advice on the law-making efforts on securities transaction.