Research On Legal Issues Involving Securities Financing Out Of Supervision In Chinese Securities Market

Securities financing out of supervision is a kind of stock leverage.In recent years,it has pushed the stock market up and down.The regulatory measures for over-thecounter financing by the regulators have been continuous,but it seems that the securities financing outside supervision has not been completely eliminated.In November 2019,the Supreme People's Court issued the minutes of the national court's civil and commercial trial meeting(hereinafter referred to as The 9th Minutes).It provides guidance for the settlement of disputes over the securities financing outside supervision.It is of great significance to stabilize the order of financial market,raising judicial credibility and protecting the legitimate rights and interests of investors.It should be noted however,there are still some points to be discussed such as whether the contracts of securities financing out of supervision has the guarantee of law or not.The determination of civil legal relationship of securities financing out of supervision will affect the basic principles of law and the methods of legal interpretation.Therefore,it is of great significance to solve the disputes over securities financing out of supervision.As The 9th Minutes does not mention the civil legal relationship of it,many courts are still confused in determining the cause of case.Both private lending and entrusted financing can not perfectly summarize the legal relationship of securities financing out of supervision.Therefore,it is advisable to refer to the margin trading business and treat securities financing out of supervision as an independent civil legal relationship.The Supreme People's court holds that the contract of securities financing out of supervision is invalid because it violates the franchise of margin trading.Judging from the legislative purpose of the securities law,regulatory nature and social harmfulness,I believe that the contract of securities financing out of supervision is not always invalid.The main body of the off-site capital allocation business is not only the capital allocation company,but also the individual.These financing companies often carry out large-scale financing transactions,which will aggravate the fluctuation of the securities market.They are easy to abscond with money.So,there is a big difference between them.We should discuss them separately according to the actual situation.For the analysis of rights and responsibilities in the disputes over securities financing out of supervision,since all the contracts of it are regarded as invalid contracts in The 9th Minutes,The 9th Minutes only involve the responsibilities in the case of invalid contracts.Based on the different legitimacy of the contracts for securities financing out of supervision,I analyze the rights and responsibilities of the funders and investors respectively.And I also discuss the assumption of the extended loss under the limit of stock falling.If both sides share the benefits,they should also share the risks.If the lender only charges interest,the investor shall bear the part of the extended loss.In my opinion,in addition to judicial actions,we should also take the improvement of legislation and the optimization of supervision in advance of securities financing out of supervision into account.At the end of this paper,on the basis of sorting out the judicial treatment of the disputes over securities financing out of supervision,I put forward other methods to solve the problem like strengthen the monitoring of securities financing data and so on.I hope to promote the development of the capital market by improving the reasonable regulatory system of securities financing out of supervision.