Research On Legal Issues Of Outside Funding Regulation In Chinese Stocks

As a financing approach relative to inside financing,outside funding boasts of a long history.However,it had always been beyond regulations until it was eliminated by China Securities Regulatory Commission(CSRC)for initiating the stock market crash in the second half of 2015.High leverage in outside funding can make securities market vulnerable to risks and hazards,but by no means shall it be cracked down as a dreadful disaster because it is still of positive significance.The key to this issue is the establishment of a scientific regulation system to bring outside funding into regulation,keep it away from risks by means of guidance and normative regulatory means,give full play to its superiority and invigorate securities market.In this research,the author focuses on the jurisprudential analysis of outside funding in the stock market,elaborates the development of outside funding regulations both theoretically and empirically and reflects on the legal issues of outside funding by centering on funding screening and rectification,based on which suggestions for perfecting outside funding regulation system for Chinese stocks are put forward.This research consists of four sections:Section one looks at the jurisprudential analysis of outside funding.To begin with,the definition of outside funding is given in both narrow and broad senses since there isn' t a unified concept with respect to this term.In the following,emergence and development of outside funding is elaborated,followed by characteristics of outside funding,such as high leverage,dependence on new Internet technology,diversity of participants,low access threshold and high operating efficiency,etc.In addition,comparison between outside funding and inside financing is conducted from several aspects,such as regulatory rigidity,access threshold,leverage ratio and compliance of capital operation,etc.At the end of this section,the two business patterns of outside funding,i.e.umbrella-type structured trust pattern and P2P Internet pattern are emphatically analyzed.In section two,development of outside funding is elaborated both theoretically and empirically.The author looks at the property and effect of outside funding contract and presents the situation of outside funding regulations from the perspective of regulations on participants of outside funding and measures taken by China Securities Regulatory Commission(CSRC)after stock market crash.Legal issues of outside funding regulations are reflected on by centering on funding screening and reorganization in section three.Regulatory problems and deficiency exposed during funding screening and reorganization are enumerated,followed by the necessity of outside funding regulations by analyzing the elementary value,risks and the benefit of supervision.Moreover,experience in outside funding regulations developed by the United States and Hong Kong is presented.In section four,suggestions for outside funding regulation system for Chinese stocks are put forward,with one basic ideas proposed,i.e.taking the guiding principle as the elementary ideology of supervision;constructing concentrate regulating rules,including establishing an outside funding regulation system,renovating the compartment system to make sure the regulation advances with the time and perfecting the operating mechanism and benefit-risk balancing mechanism of outside funding regulation;and perfecting the supporting facilities,i.e.combining administrative regulation and self-supervision,improving investors' capabilities in risk control and carrying out the securities account real-name system.