Margin The Legal System

Margin trading is considered as an important stock transaction method and a mature stock system, which has been widely adopted by many countries and regions. In our country, since the history of the bond market is comparatively short, and there exists risk in nature in the margin trading, our bond market has been built more than 10 years but for controlling the risk, maintaing the safety of our bond market and the stability of the financial market, our country always forbids margin trading. It is widely believed that margin trading has experienced from banning to solution, and the first official trading was held on March 31,2010.Owing to the great risk of margin transaction, such an effective stock market and the credit system is not perfect in China in this business, the key link of the system is the risk control.Because of the high risk, margin trading need an efficient and conveninent gurarantee system that in line with its requirements.Since 1 August,2006, China has introduced the transferring guarantee system. According to the choice and inspection of margin transaction security system in many countries and regions, transferring guarantee provide a double guarantee for the claims by combining the transfer of wonership and the set of security.After 10 years of development, chinese security market has gained great achievements in many respects. But, undeniably, Chinese security market is still in the transitional period, some problems are directly restricting its development. Recently, the development of margin purchases and short sales in our country is still in preliminary stage, thus a basic premise of the pilot is to correctly evaluate the practical experiences of overseas securities mrakets. Based on a comprehensive and indepth study of the history and systems design of margin purchases and short sales in foreign security markest, as well as taking the overall situation of Chinese securities market into consideration, this paper insists that it is very important to introduce margin purchases and short sales into Chinese security market. Besides, a number of basic issues involved in preliminary stage have been discussed, such as the participants, the standards of subject secrities and the rate of margin requirement etc, which constitutes a fundamental institutional framework of margin purchases and short sales.