The Study On The Guarantee System Of Margin Trading

Margin trading is one of the credit transaction. It can be divided into financing transaction and securities lending transaction. Financing transaction can be called buy long and securities lending transaction can be called short selling. In the foreign stock markets, margin trading is widely applied. It can perfect stock market, prevent stock market from severe shaking and reduce the risk of stock market.At the beginning of margin trading, the government's policy is one of drift. And then it turned to negative. In recent years, margin trading gets the official approval. Early in the 1980s and 1990s, trading which likes margin trading had arisen. Securities companies lend money to the stock market investors without guaranty. The purpose was to attract the investors. Due to the defective stock market, State Council enacted Provisional Regulations on the Administration of Share Issuance and Trading. this regulation forbad margin trading. However, the debate about margin trading thrived after the regulation. In the June 30, 2006, China Securities Regulatory Commission (hereinafter referred to as the "CSRC") promulgated the Measures for the Administration of Pilot Securities Lending and Borrowing Business of Securities Companies in which allowed margin trading. In the April 23, 2006, State Council enacted Regulation on the Supervision and Administration of Securities Companies. In Chapter IV of this regulation, margin trading is provided in detail. The party's Rights and obligations is definite and this regulation establishes the legal basis for margin trading. Nevertheless, margin trading was delayed because of other things after that.As the arrival of 2010, it is a good chance for margin trading. CSRC permits the margin trading application of securities companies, such as GuotaiJunan securities, Haitong securities. Margin trading finally is permitted after many years and it changes the situation of stock market. In brief, it is a symbol of the stock market.Although margin trading is permitted in the law and practice, the guarantee system is not perfect. There are some defect and conflicts with other laws. Margin trading is the one of the credit transaction. The base of the margin trading is the credit. What's more, it relays on the guarantee system. Therefore, the guarantee system plays a significant role in the margin trading. It protects the stock market from severe shaking. It is essential that study on the guarantee system of margin trading.Through the method of functional analysis and literature research, the thesis makes a deep research on the guarantee system of margin trading. The thesis consists of three parts which are preface, test and epilogue. In the preface, it introduces the object, purpose and meaning. The function of this part is briefly introduce.The test consists four chapters. The meaning and effect of margin trading, the analysis of legal relation, the dilemma of guarantee system in China, the innovation of guarantee system. During the study, we research the law of developed securities market. After that we get some ideas and suggestions. As detailed below:Chapter I. a brief introduction of margin trading. Firstly, we gets the meaning of margin trading. The test distinguishes the credit transaction from margin trading through the analysis and makes a brief introduction of margin trading. Secondly, the test crystallizes the effect and divides it into two parts. One is positive effect, the other is negative effect. After the analysis, we get the conclusion that margin trading is benefit to the stock market. The key point of the institution is how to play the effect of law and straighten out the legal relationship. What's more, the strictly, reasonable rules must be enacted.Chapter II. the analysis of legal relationship in the margin trading. In this chapter, we make a deep, systemic analysis. It contains creditor-debtor relationship, commissioning relationship and guarantee relationship. Securities companies provide investors with additional funds or securities. So they formed the creditor-debtor relationship. Commissioning relationship arises from the commission of the securities companies. Security relationship is the core of the design margin trading relationship. Through the analysis of security relations, we arrives in the guarantee system of trading relationship is different from normal one. The different thing is that the security is constantly changing and securities companies have the right of disposing. This laid the foundation for the following. Chapter III. The dilemma of guarantee system in China. Measures for the Administration of Pilot Securities Lending and Borrowing Business of Securities Companies uses trust to form the guarantee system. It is benefit to protect the safety of investor accounts and the securities company rights, such as forced liquidation, priority claim. However, there are a lot of problems. It conflicts with other law. The conflict usually exist in the qualification defect , inadequate obligations, not meet the original intent of parties and contrary to general principles of security law. After the analysis, we get the conclusion that trust is not a perfect solution to solve the problem of guarantee. In practice, it may be used to destroy the healthy development of the securities market. Then it leads to solutions to overcome the problem.Chapter IV. The innovation of guarantee system. Firstly, we make a research on the developed countries and regions, such as the United States, Japan, China Taiwan. Secondly, through the first three chapters of the margin analysis of security mechanisms, we get some conclusions and suggestions including declaration of trust, alienation guarantee, account pledge, maximum pledge. These innovations have their own advantages. However, there are also shortcomings. Through comparative analysis, combined with our existing laws and the specific circumstances of the securities market, maximum pledge is a best way to solve the problem because of its lower cost, easier to practice and more closely the existing law. Therefore, maximum pledge is applicable in China.At last, get a summary of the entire thesis, make clear the feasibility of maximum pledge in China.