Study On The Legal Regulation Of Securities Error Trading

As an independent abnormal trading,secutities error trading refers to the situations that transactions have been executed by technicalfailure or human error.The wrong information producted by error trading would mislead the market and destroy the market order,so it is nessary to set some regulatory law. Following the introduction, this paper consists of four parts:1.The identification of error trading.Identificating the error trading,must consider compresively including the error level、causing factors、elements and its legal character.Firstly, the error must be "clearly " enough to endanger the function of market price mechanism,and the Exchange usually take the way of “numerical Standard + artificial judgment” to judge;Secondly, the causing factors of errors trading have been limited to human error and technical failure;Thirdly, the elements exist diffenrently among the Exchanges. For example,most exchanges only admit the price mistake, but the other exchanges name of any of the wrong terms of the transaction including price、quantitise、securities name and code as an erroneous trade; Forthly,regarding its factors’ objectivity,the mind of the counrerparty of error trading often is not guilty,so the error tradings have no illegality.2. The disposal mechanism of securities error trading. Besides of the maintenance management and control mechanism,the emergence disposal mechanism set by the securities regulatory agency for error trading contains a series of enforcement mechanisms which have various of effect.Among the effective mechanisms, there are three ones which belongs to shock-absorbers substantially,including the mechanism of price stability 、 restriction or suspension of trading and deferred delivery. All of them are in order to give more time for investors and the Exchanges to settle the problem.Except for that,the other two mechanism have the effect in denying the validity of the contract.Considering the big influence of the mechanisms above on the benefits of the market,some resonable application conditions and operating procedures should be established following the doctrines of publicity、 timely and balance.3. The civil remedy mechanisms of securities error trading. At present, most of securities regulationes are management norms, rarely relating to the civil liability of the fault party. Actually, the civil liability is more protectly for investors,and increase illegal cost which can urge the securities service institutions to paying more attention on their obligations of maintaining and protecting the trading system. Beside, it can also strengthen the judicial authortity’fuction of dispute resolution, avoiding the crude judge of exchanges.In practice, the most bitter controvercy happens to the civil liability of exchanges、secutities companies and outsourcing companies.However,on the basis of respecting the exchanges’ self-discipline management, judicial intervention must be limited, only exhausting all the interal remedies before can the parties take a prosecution.4. Some advice. By far, there are no clear provisions about error trading in chinese "Securities Law",and the provisions about the abnomal trading are too simple,the absence of upper law make exchanges be not able to settle the error trading effciently. Therefore, it is necessary to establish the law to regulate error trading. Firstly, increasing some provisions of the "Securities Law" to make sure error trading being covered; secondly, establishing a series of specific disposal mechanisms. Last but not least,the power of CSRC and exchanges must be allocated rationally,and make sure the exchanges have the authority to determine the specific measures and their processes.