Reflect And Control Of Financial Risks In Futures Brokerage Firm

Futures market, which is the advanced format of the development of market economy, is one of the important components of modern market economy system. It has the functions of transferring risk and finding the real price, as a result, it has the non-substitutable effect on facilitating the enterprises' construction of modern market economy system, transforming their operation mechanism, as well as guaranteeing the harmonious development of the national economy. However, the futures market is of high risk, not only because of the inclusion of the risks of spot transactions but also of the financial leverage effects arisen from futures transaction itself. The futures brokerage firms, which assume the main futures transaction risks, are in the important chain of risk control system. In the past few years, almost all the incidences of risk accidents round the world were related to the financial risk control in the futures brokerage firms' stage.The financial risks of futures brokerage firms involve management risk, operation risk, capital risk and technical risk with a focus on capital risk. Therefore, the financial control based on risks (financial risk control) becomes extremely important. In this article, the theoretical methodologies of evaluating the financial risks are investigated. Later on, how to control the financial risk are set forth. By dividing the process of futures transactions into three phases, that is, beforehand, during the transaction and afterwards, we discuss in detail on how to control investor' s margins for each phase. In addition, how to control the risk of finance, which belongs to the futures brokerage firms, is also examined. Finally, as an outlook, we bring up the solutions of how to effectively control financial risks by using quantities analysis.