On The Legal Issues Of The Establishment Of Securities Stabilization Fund

The securities stabilization fund is a type of policy fund used by the government to deal with the adverse effects of major events at home and abroad and to subside the huge abnormal fluctuation in the domestic securities market.It mainly functions through the reverse operation of the securities market,and the operation instruments include purchasing the stocks during irrational market crash and selling the stocks during the irrational market bubble flooding.From June to July 2015,China's securities market went through abnormal fluctuations,and China's government used fiscal,financial,administrative,judicial and other measures to support and “rescue" the securities market.Under the circumstance that irrational huge fluctuation still happens relatively frequently,the research of securities stabilization fund is of great significance to the future development of China's securities market.The first chapter of this thesis analyzes the concept and notional issues of the securities stabilization fund,including the definition,characteristics and its rationality and necessity.It has three main characteristics,namely,emergent,single-objective and post-positional.As to the disputes to the stabilization fund,first,as a tool used by the government to directly intervene the market,it has rationality both theoretically and practically.Secondly,the stabilization fund is an active stabilization mechanism,which mainly served to subside the irrational fluctuations,while China's current stabilization mechanism belongs to the passive stabilization mechanism,which mainly served to maintain the daily stability of the securities market.Besides,the rationality and necessity of establishing the securities stabilization fund in China also include improving the government's macro-control ability,safeguarding China's financial security and stability and enhancing the overall anti-risk ability of the securities market.China's precedent of "reform first" increased the impression that China's securities market is policy-oriented.In the context of rule of law,China should follow the "legislation first" principle.The second chapter of this thesis analyzes the conflict and coordination between the securities stabilization fund and China's current securities law.First,as to the short-swing trading rule,the scope of China's exempted subject is too narrow.Considering public welfare and the efficiency and other factors,the regulation of securities stabilization fund under short-swing rule lacks fairness,and the stabilization fund should be included in the scope the exemption.Secondly,as to the insider trading rule,the stabilization fund itself and the relevant personnel should be treated differently.The stabilization is fair and lawful so that it will not constitutes an insider trading,whilethe relevant personnel of the stabilization fund should still be subject to the regulation of insider trading.Thirdly,as to the manipulation of market,the stabilization fund will not violate such rule as the purpose of the stabilization fund is not to disrupt the market order,but on the contrary,to maintain the market order and protect the investors.Fourthly,as to the stock purchase rule,the operation of the securities market stabilization fund will not infringe the legal interests to be protected.Therefore,the stabilization fund should be exempted.The third chapter analyzes the detailed regime based on the comparative study.First,in terms of the standards for government intervention,China should adopt "non-economic standard”.Secondly,as to the source of funds,the funds can be collected from the stamp duty on securities transactions,the margin provided by the brokers and institutional investors according to their total share capital,and capital provided by the listed companies according to the amount of their tradable shares.It is worth noting that due to the nature and purpose,it is not appropriate to includes the social security fund and the public placement to commercial banks,insurance companies,pension funds or other institutions.Thirdly,in terms of the competent authorities,considering the national conditions and the existing regime,the provisional "double-layer" management mode is more suitable for China,and "inter-ministerial joint meeting" is the preferred mechanism of this management mode.Fourthly,in terms of the means of operation,we may can choose the stocks with comparatively low valuation and high liquidity from the constituent stocks of the Shanghai and Shenzhen 300 Index as the operation target.Fifthly,in terms of the exit mechanism,we may combine the direct sale of stocks and issuance of ETF index funds so that after completing the stabling task,the securities stabilization fund can exit without exerting a serious impact upon the securities market.