On The Influence Of Margin Short - Selling Mechanism On The Volatility Of A - Share Market And Its Risk Prevention

In2010, Margin trading pilot was formally implemented in our country’s A-Share market. It meant that the institution of credit-trading was introduced into our country, which filled the empty of selling-short earing mechanism instead of just one-side buying.Selling short is a basic trading mechanism in mature capital market.It provides a self-regulation method for the market.Meanwhile, it also improves the liquidity, raise the efficiency, and change the situation of one-side-market, which had maintained for a long time in our country. It not only enriches the investors’trading method, but also ameliorate the earning mode of the securities company’s Brokerage business.After transforming from pilot to regular, the scale of margin trading market developed very quickly. With the implement of securities refinance, the quantity, the scales of securities source and the balances of market selling-short, will all increase considerably. Under this circumstances, this paper will try to analyze the selling-short mechanism’s impact to the volatility, and give some useful advice to the policy regulation and risk prevention of selling-short mechanism. The writing clue and structure arrangement is as mentioned following:The introduction part concisely illustrates the paper’s significance.research ways, creative contribution and the limitation.Chapter one is a synthetical appraisal to the present research achievement of academic circle. This chapter abstracts the pros and cons of domestic and foreign scholars, mainly focus on how the selling short affect the market volatility.Chapter two illustrates the developing progress of selling-short mechanism in overseas securities market. First, the paper introduces the opening of short trading. Second, summarizes the developed capital market. And then, mentions the growth of emerging market. At last, concludes the practical experience and lessons of overseas market.Chapter three concretely analyzes the present situation of A-share market. It indicates that rapid increasing speed, low proportion of the whole credit-trading,and inbalance development between magrgin and selling short, is the main feature of our market. Further more, this chapter explains the bottleneck and obstacle under the current rules.Chapter four devotes a lot of space to describe selling-short’s risk, including identification and classification of short trading risk。 Then illustrate the transmission progress of selling short, and the principle of selling short’s impact on market volatility.The five part does some empirical analysis on how selling-short affect the A-Share market’s volatility and illustrates the empirical result.Chapter six is the conclusion and policy suggestion of this article. The empirical result is:The rapid increasing of selling short scale does not obviously expand the volatility of market’s return rate. On the contrary, selling-short mechanism reduced the whole volatility of A-Share. But meanwhile, widespread short activity would expand and deepen the systematic risk. Thus, the critical of preventing selling-short risk is to establish the risk emergency mechanism. Meanwhile, the regulators department should perfect the correlative institutions of margin trading, intensify the information closure, and raise the transparency of short trading. Furthermore, it is urge to perfect securities-refinance and reduce the cost of short trading to form a sound selling-short institution.