The Study On Risk Disposal Of Chinese Securities Companies

As the basic elements and important financial intermediaries, securities companies play an essential role in the healthy development of stock market. However, in the background of transitional economy and the young age of Chinese stock market, the supervision of securities companies, the corporate governance and the design of internal mechanism are far from perfection.The level of capital gains of securities companies had been decreasing resulted from the downturn period, and thereupon large amount of risks were accumulated in securities companies. Since 2002, nearly 40 securities companies have been disposed by supervision department. Some problems and criticism appeared in the process of disposal because of legal deficiency or ways of disposal, consequently, the risky situation of some securities companies were not thoroughly changed, as well as the effect of the subprime mortgage crisis occurred in 2007, the companies are still being faced with threats of existing. Thus, how to properly dispose highly risky securities companies is still the important issue in stock market. More importantly, in the special period of development of Chinese stock market, the researches on the risk disposal of securities companies are meaningful to perfect relative laws and to establish a long term mechanism for risk disposal, and it is meaningful theoretically and pragmatically. Therefore, this paper researches on the issues of risk disposal of securities companies with inductive method and case study.Based on the literature review and the background introduction of risk disposal, this paper analyzed the reasons and problems in risk disposal. Then, this paper describes the history of risk disposal of securities companies in our country and summarizes the problems that include imperfect laws and rules, lack of long term mechanism and capital source is single, and all the problems above are exemplified by cases. In the end, through the induction of successful experience from foreign countries, this paper brings forward that perfect legal system of risk disposal, protection system for medium-small investors and marketization of supervision department are the basic characters of a mature stock market. Combined with the social and economic practice of China, the theoretic guidelines of how to build risk disposal system, to choose disposal means and to make a better supervisory system are given.