Research On Guarantee Model Of Margin Trading In China

Margin trading, as one kind of security credit trading, originated from Dutch in17thCentury. After centuries of improvement, margin trading has become animportant way of trading. Because the core of margin trading is the stock pricevolatility of the spreads, so it is speculative. In order to eliminate market risk and tomaintain orderly and safe in the stock market transactions, guarantee system ofmargin trading has become a first choice of countries.Margin trading in China has just started, the Measures for the Administration ofPilot Securities Lending and Borrowing Business of Securities Companies(hereinafter referred to as the" pilot approach ")are summarized in the guaranteesystem of margin trading, after this, Shanghai and Shenzhen Stock Exchange havefurther provisions of the guarantee system. However, due to the existence of conflictbetween China’s margin guarantee system and other existing legal system, academicsand practitioners are debating about the margin guarantee system. This paper attemptsto explore the pattern of margin guarantees solution.This paper is divided into three parts, namely, introduction, body and conclusion.Introduction introduces the topic of this article, the research methods and innovation.Body parts include four following chapters:Chapter I mainly introduces the margin trading and the guarantee mechanisms. First, this part summarizes the margin trading. On the basis of evaluation of itseffectiveness and risks, this part leads to the object of the margin guarantee system.Second, this part analyzes the characteristics of the legal relationship of the marginguarantee mechanism. The whole process of China’s margin is a relatively closedsystem to ensure the safety and efficiency of transactions between the differentaccounts of the series, the guarantee system in which plays an important role. Likeother legal relationships, the legal relationship of margin guarantees includes subject,object and content.Chapter II analyzes the legal predicament of margin guarantee mechanism inChina. First of all, this part describes China’s laws and regulations with the relevantprovisions of the margin guarantee system, which concluded: China’s marginguarantee model is the trust structure. However, the trust structure conflicts with ourexisting laws, which leads to the contents of section II of this chapter. The one hand,China’s margin guarantee mechanism conflicts with trust law, it goes against the legalprinciple of trust law; the other hand, China’s margin guarantee mechanism conflictswith China’s traditional civil and commercial law principle. Because it is open toobjection only need to be perfect.Chapter III describes the major countries and regions’ margin trading guaranteesystem, including the United States，Japan and Taiwan. By analyzing the legal subject,cash deposit and management of margin trading, In author’s opinion, the UnitedStates, Japan and Taiwan take the path of practice model, These countries and regionsestablish a margin guarantee architecture and mode of operation in order to achieve amargin of safety and convenience. This model is recognized in the administration ofjustice and practices. Such a system design can be reference for our margin guaranteemodel, which leads to the chapter IV.Chapter IV is the improvement of our country’s margin trading guarantee system.First, I analyze the guarantee, pledge, and the accounts pledge which are common inour academic and practice. I consider that the foregoing traditional doctrines areunable to meet the practical needs of China’s margin guarantee, which leads tofunctionalist idea to solve real-world problem-oriented. Second, this part analyzes the feasibility of functionalist idea. The one hand, the efficiency of the financial marketrequirements make it reasonable, on the other hand, the successful experience ofextraterritorial make it feasible. Last, this part is the concrete suggestions forperfection of guarantee mechanism.The conclusion is a summary of the full text, I propose the basic rules of theCivil and Commercial Law should keep pace with the times, when we introduce theidea of functionalism. It can provide more space for orderly legal system innovationin financial markets.