Construction And Legal Regulation Of China's Securities Financial Company

In 2004, Zhou Zhengqing, deputy director of the NPC Financial and Economic Committee, said in public that in order to maintain the balance between the supply and demand for funds in the capital market and guide the capital of bank into market regularly, the agency proposed to set up a securities financial institute ideas. This is undoubtedly an exciting news for the brokerage firms. Insiders predict that China's financial market will emerge securities financial company. Meanwhile, a source disclosed that the proposed of financing securities pilot has got a high degree of attention ,and recognition has been made by the Central Government. At present, the Commission departments are doing a detail study on the feasibility of the non-bank financial institutions. By analyzing the financing securities lending system of America Japan and, and the concrete situation of China, this paper expound the detail information of the securities financial company, including the concept, function, necessity, feasibility, and even the legal problems of it. Securities financial company, which is originated in the credit trading system, is a rather special securities intermediary. By the company, the government strictly controls the funds and securities transactions through the credit multiplier effect, so as to both alleviate the contradictions between the capital market and the currency market, and control financial risk. At present, securities lending business hasn't come into practice in China completely, and capital financing business is still at the initial stage. There are many reasons contributed to the situation above, one of which is the limit of the law in China. Under the present legal framework, cash transaction is allowed, while financing transaction is strictly forbidden. Even though the new Securities Law has breakthrough the restrictions of the old one, but the real sense of financial transaction has been restricted by many parts, including the government. What's more, some insiders said that owing to the lack of a complete legal system, the banks reluctant to lend money to the securities corporation in case of financial risk. In view of this, securities financial company, with its higher level of credit, can ensure the loans and interest income security, and boost the public's confidence in financial transaction. For many securities corporations, this can widen the channels of pooling funds. Besides, the securities financial company is significant to the improvement of the financial structure, which include making up the insufficiency of the present financial channels, facilitating the implementation of effective supervision, and linking up the money and capital market. Generally speaking, establishing securities financial company is an inevitable choice to the development of the securities market in China.