| Ever since the pilot project of margin trading business started on the Chinese mainland on 31st March,2010, A-share market of China has really said goodbye to one-track market. And short selling mechanism finally appears in the security market. This pilot of margin trading business has had a profound effect on China's security market and those security companies involved in the pilot. By the 31st March,2011, it has been a whole year since the margin trading business started up on the Chinese mainland. The performance of market has shown that the scale of the business has had a distinctly fast-growing trend no matter in the amount of borrowing money to buy and borrowing stock to sell, or the remaining sum of margin trading. So far, there have been 3 batches of security companies involved in the pilot. Over 2200 security sales departments and 25 security companies have been qualified to do margin trading business. Meanwhile, investors are becoming more and more positive in the margin trading business.This present thesis focuses on three main aspects. First it focuses on the typical margin of several credit models all over the world, and analysis of various models of the impact of securities companies. Secondly, based on margin of the mainland market one year after the pilot started the transaction data, the present researcher used Eviews 6.0 software to examine changes in the amount of financing to buy and changes in the amount of margin to sell on Chinese stock market liquidity and volatility effects. Finally, combining the margin trading data of the pilot of margin trading and investigating the positive impacts which the pilot of margin trading brings to the security companies, the present thesis analyzed the various risks the pilot of margin trading produced, and supplied corresponding strategies.The introduction comes in the first chapter. Chapter2, however, focuses on the meaning, features and functions of margin trading, as well as four phases in its development in the Chinese mainland. Chapter3 pays much attention to analysis of several typical credit modes of margin trading in the world, which consists of scattered credit mode represented by U.S.A., one-track centralized credit mode represented by Japan and two-track centralized credit mode represented by Taiwan, China, as well as credit mode still in the process of pilot in the Chinese mainland. Also, Chapter3 analyses the effect every mode has on the security companies. Through empirical analysis, the forth chapter uses software Eviews 6.0 to do ADF single root tests and pair wise Granger causality tests, then to study the influence of the change of the amount of borrowing money to buy and borrowing stock to sell to the liquidity and volatility of stock market. The fifth chapter works on the influences that the margin trading has on pilot security companies. First of all, according to the transaction data about the pilot of margin trading business in the past year since it started, this chapter analyses the positive impacts the margin trading brings to the pilot companies in interest income, brokerage commission income and intermediate business income. Moreover, margin trading business can also lead to profound effect to self-service business of those security companies involved in the pilot and increase competition between security companies and cause industry division. Secondly, in spite of the positive effect the margin trading brings to pilot companies, the margin trading, in the meantime, will put pilot companies at credit risk, market risk, liquidity risk, operational risk and settlement risk, etc. And then, this chapter provides some analysis about the relevant strategies to deal with these risks. Finally, there is the conclusion of the paper. |
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