Research On Legal Risks Of Merchant Bank Business Margin

With the development and innovation of financial services, merchant banking products involved margin show remarkable growth both in size and types. Margin become an important method to reduce business risks, has also become an important way for companies and individual customers to obtain funding and financial services. However, the current laws and regulations on margin is ambiguous and also have different ideas for the legal nature of margin in practice, causing the frozen or deduction of account happens occasionally, the safety and protection capacity of margin is therefore reduced. Therefore, the research on merchant banking margin risks and preventive measures become more and more important.With legal perspective, combining theory and practice, through case analysis, partition analysis and key point analysis, this article analyzes legal regulations on margin which merchant banks’traditional business involved in. This article will set margin risk consciousness by analyzing three typical case and point out risks exposed in practices and main problems in theory of margin, and provide ideas and operational recommendations on prevention legal risks of merchant banks in business margin.This article believes that the key to avert legal risks of margin is to enhance the "safety" of margin. There are two means for preventing legal risks of margin, on one hand, making margin has features of mortgage guarantee, enhance repayment priority capabilities or other advantages, on the other hand by innovative methods, changing the pattern of the operations, raising the "safety" of margin. And these are ideas on averting legal risks of margin:1. Mortgage under property law;2. Legal preferential payment;3. Use the advantages of drawee margin;4. Change on ownership of margin;5. Notarization sector intervene as the third party. And the operational recommendations are:1. Establishment deposit mortgage;2.Arrange repayment priority in written form;3.Do background investigations;4.Change margin owners;5.Notarization of deposit. Among the ideas and recommendations mentioned above, this article focused on the notarization of deposit. Through analysis of the possibility and strengths and weaknesses of the margin deposit notary, this article attempts to use this new way which is less common in current theory and practice to reduce the risk of margin, and it is quite important for both academic research and practice.Generally, this article considers that through the adoption of appropriate measures and great efforts, legal risks of margin which merchant banking faced with could be largely resolved, and the protection capacity of margin could play better.