On The Construction Of Credit System With Institutional Investors In The Capital Market Of China

Institutional investors with funds, information superiority are the capital market of great power. They play the role of financial intermediary. They have the concept of a long-term investment and value investment. Through a combination of investment, diversify investment way, they can effectively avoid risks, for the client to achieve maximum return on investment. For the development of enterprises to provide long-term, stable financial support, to meet the financing needs of enterprises. The rational investing activities can rise to reduce fluctuations in stock prices, leading the medium and small investors’rational investments, stable function of the securities market. With the development of productivity and further refinement of social division of labor, due to the trust, the medium and small investors give the funds to institutional investors. The funds of ownership and management become separate. Because of the lack of effective regulations, Institutional investors may abuse the funds and results to reduce the interests of investors. Because of lacking regulations Institutional investors can not be punished. They would not like to fulfill the promise.The article is divided into three parts:The first chapter introduces the definition、characteristics and types of institutional investors and the concept of credit system. At present the largest institutional investors is securities investment fund. On credit and credit system it elaborates the concept, that credit is the cornerstone of market economy, the credit establishment is the requirement of market economy. Credit system through making norms can regulate credit relations and credit activities between people,we can call them the " institutional arrangements", they are to regulate credit behaviors and relationship with interests to ensure, restrain activities of people.Through making laws and rules of institutional investors, we can effectively regulate the dishonest behavior of institutional investors, protect the interests of small investors, and also helping enterprises’development by supporting funds.At the same time, the credit systems about Institutional investors are good for the securities market credit environment, they are an important guarantee for the healthy development of securities market.The second chapter analyzes the institutional investors of China in the dishonesty of the status quo and causes. Institutional investors’ discreditable behaviors include:the manipulation of stock prices; short-term operation caused by fluctuation of stock prices;" Mouse Storehouse" behavior, institutional investors is using undisclosed information and client funds by the manipulation of stock prices to seek individual interests, Violating the majority of the interests of medium and small investors; The chapter is also connected to the herd behavior and short-sighted behavior, pointing out that China’s institutional investors herding behavior, relative to individual investors, more likely to cause the fluctuation of the stock price, and institutional investors don’t pay attention to long-term investment、the value investment activities, they are not rational investment behaviors. Points out that institutional investors failed, mainly of institutional investors is not a long-term investment, value investment, which can not be in complex and changeful market to achieve a stable return on investment; the information disclosure system is not perfect, It cause the result that the market information transmission’ failure; Because legal system is not perfect, institutional investors’ illegal and low cost leads to actions occur.In the third chapter we can analyze and draw lessons from the credit regulations about Institutional investors in USA, so as to make laws and rules. Investment fund play an important role in capital market in China, and Investment fund not have good impact on other Institutional investors, because the legal system is not perfect. We can make our laws by regulating internal constraint rules、disclosing the information about Institutional investors、 coordinating the duties of organizations and associations in capital market and so on Supporting systems and market mechanism can also help making rules about Institutional investors in China...