Margin Trading And Stock Market Volatility

The establishment of China’s capital market is relatively late, the financial system is not perfect and in continuous innovation stage, before 2010, participants in A-share market can only be unilateral spot trading, the participants would like to make a profit, can only be taken "Buy low, sell high" investment strategy, and in the exchange market, It is hard to arbitrage by short stocks. In fact, this kind of resource waste. In foreign mature capital markets, margin trading system has been introduced for decades, and spawned a series of trading tools, market participants provides a wealth of tools and monetization transactions. Finally in March 31,2010, China’s A-share market began a formal pilot margin trading system, marking the end of China’s A-share market "unilateral market-making,".For the introduction of margin trading system, the relevant agencies, including the State Department, Securities and Futures Commission in the pre-made adequate preparation, and learn from the experience of developed countries capital market, the introduction of a series of laws and regulations, according to the reality of our capital markets in our implementation of the "single-track system of centralized credit system", and the provisions of the law of nature in particular aspects of the margin trading indicators.2015, the Commission launched a revised "securities margin trading business management approach", giving the securities firm more rights, marking the margin trading system into a market-oriented stage. At present, the number of the margin trading underlying stock is 900,accounting for about 80%A-share market value.Domestic and foreign scholars on the margin-related content have done thoroughly discusses, the overseas scholars to make short sales of stock market pricing mechanism more effective impact study more fully, domestic scholars on the stock market in addition to the impact studies, also discussed which system is more suitable for China’s national conditions.2014 to 2015, China’s stock market has experienced a "mad cow" and "crash" the financial system as a system of two leveraged transactions, with its system of marking to market, margin system and the strong level requirements, etc., in the stock market the spike play an important role. InIn this paper, the preface introduces the background, research ideas,in the second chapter introduces the concepts and theoretical knowledge of margin trading, and introduced the situation of the two financial systems development. Chapter III conducted a qualitative analysis perspective, the fourth chapter selected CSI 300, the balance of the financing and margin balance in mid-June 2015 for the nodes were "mad cow" and "crash" mathematical statistical analysis of two periods, and the use of double difference model, volatility in the stock market crash margin trading volatility of the underlying stock and non-underlying stock were compared. We reached the following conclusions:1, there is a relationship between margin and market volatility, pushing the margin in 2014 to 2015 bull market, and in the "crash time" because of "strong level" and other mechanisms, the stock price accelerated the collapse of the margin trading scale down, after the double differential analysis, "crash" period, as equity volatility subject of margin trading margin was significantly higher than the underlying shares in China’s a-share market, margin trading fueled played a role or down.2, in our country, the financing balance is far higher than the balance of margin trading mechanism, as the short selling mechanism did not play the role of foam punctured side up, margin trading business development is not balanced.Gives advice:focus on the development of trading business, the pursuit of bilateral capital markets, enabling balanced development, punctured market bubble, to stabilize the market, to form a reasonable valuation of the margin trading securities business; brokerages and other institutions for more stringent risk control measures, so that market participants, especially traders margin trading system capable of rational transactions, to ensure the stability of the market.