Research On Problems And Solutions Of Risk Management In Securities Margin Trading Of DF Securities

As the internet technology is used in the securities industry more widely,it is popular and convient to open an account for securities trading through internet and cellphones.Securities companies are facing huge challenges in the traditional stock brokerage area.It is a big question for securities companies to find new sources of profit under an environment of fierce competition.Margin trading brought new sources of income for securities companies as the earliest innovative business of securities trading to be started.DF Securities Corporation has carried out margin trading business for more than six years since its getting qualification for margin trading in June,2010.Margin trading has a higher trading rate than that of traditional stock brokerage.Securities companies can also get interest income through lending money and securities to customers.So that margin trading has brought more benefits to DF Securities Corpotation.However,margin trading is an innovative security business of high risks.In order to control its risks,the company has established the risk management framework,measures and emergency response mechanism.But there were some problems and shortcomings in this risk management system more or less.So we need to do some jobs to improve it and make it be more perfect.This article researched on the risk management of margin trading of DF Securities Corporation.First of all,the risks of margin trading can be summarized as customer credit risk,the underlying securities risk and market risk.Then we introduced theories and methods of risk management aimed at the three aspects of risks.Secondly,we analyzed the risk management system and measures of margin trading in order to find the problems.Through the analyzing the driving factors of risks,we tried to find out the relations between these problems and the risk of mandatory liquidation.Thirdly,we used 300 ETF as the underlying security in the experimental account.Through quantitative calculating methods,we analyzed the possibilities of mandatory liquidation in the experimental account under different market conditions.Finally,according to the result of the qualitative analysis and quantitative calculation,we put forward measures and solutions on risk management of margin trading to solve the problems found before.Through analyzing the problems of risk management on margin trading,this paper drew the following conclusions.First,DF Securities Corporation should improve the customer evaluation system,which should be divided into two parts of profitability and risk,in order to avoid possible conflicts.Second,margin requirement of underlying securities should be linked to its specific risks.The risk management of underlying securities is of great importance.Third,the company should set different discount ratio for different security,in order to better reflect its fluctuation and risk characteristics.Fourth,DF securities companies should consider building a real-time system to monitor the changes of market,so that they can take measures in time to reduce risks when there are abnormal fluctuations in the market.We hope that the work of this paper can make the risk management system of margin trading more perfect.