Research On Internal Control In Securities Companies’ Proprietary Business

In China, securities companies play an important role in the securities market, which cannot be replaced. Securities companies in our country have made a great progress in the development of more than ten years. However, many problems are exposed during the process of development, the main aspect of which is the internal control. Because of the ignorance of the significant role of internal control, there is no practical and feasible internal control system established in securities companies, which increases securities companies’ risk and weakens their ability of preventing and dissolving risks. As a result, securities companies without effective internal control procedures suffer huge losses when they are faced with risks. As a characteristic business of securities companies, proprietary business has the feature of high-risk and high-yield. The ignorance of the significance of internal control is mainly reflected in the imperfection of proprietary business’s internal control system. Therefore, in the constantly changing market, proprietary business of securities companies can neither find risk effectively nor control risk within the acceptable range. Securities companies then may suffer inestimable losses.In this paper, the typical events of securities companies will be quoted to make a research and an analysis of the internal control problems in Chinese securities companies’ proprietary business. Firstly some relevant theories and regulations of internal control will be reviewed, and then this paper will make an introduction to the characteristics of securities companies’ proprietary business. On this basis, according to the Internal Control-Integrated Framework (enacted in 2013) and some relevant regulations, it can be analyzed that the Ever-bright Securities event has exposed problems in the internal control. A comprehensive study will be made to analyze internal controlling deficiencies of the trading system defects, the risk monitoring failures, the Information communication and disclosure failures and so on in the process of proprietary business’ operation and management. Finally, aiming to solve the problems in the internal control, some feasible suggestions in the respects of trading system, risk real-time monitoring, proprietary business risk reporting and so on will be put forward for the whole system of internal control.