The Regulation Research Of Securities And Exchange Commission Floor In China

As the growing of fortune ones have, people will use their money to do some investment in order to maintain the increase of fortune. In reality, the bank deposit rates can not satisfy people's need in increasing the fortune, and other alternative investment options are fairly limited. Therefore, more and more investors change their option of making more fortune to the investment in the stock market.With the implementation of the floating commission system, the competition of pricing on brokerage commissions is rather intense. In order to attract more investors, some brokerage firms choose themselves as providers to provide channels for transaction services, even lower than the cost of business operations. The direct cause of government regulation on brokerage commissions is the "commission battle" among brokerage firms. The regulatory aims to prevent vicious competition, to make the securities markets operate healthily and orderly, and to monitor on the brokerage commissions. Furthermore, in the securities brokerage business market, the standards on different brokerage commissions are incomplete and asymmetric to different investors. Thus market failure is occurred, and it also needs the government regulation on brokerage commissions.China's transaction commissions on securities brokerage market have been being regulated by the government. With the development of securities brokerage business, the commission system is also changed, from the fixed commission system at the beginning to the floating commission system. China securities regulatory commission published the Reply, which requires the new securities business department to strengthen the related capabilities on customer services. The minimum commission is the commission of all clients receive the lowest standard after setting up the new business department. Besides, the standard of commissions should be regulated in some degree. Currently, many regional securities industry associations and regional securities regulatory commissions have set the lower limit of regional commission, in order to avoid the over-competition among the brokerage firms. This paper is about whether it should require the lower limit to the brokerage firms department in the government regulation on the brokerage commission. Firstly, it explains the evolution of China's commission system through the introduction. Then, it introduces the current situation of commission based on some of the brokerage firms and the current situation of regulatory on brokerage commission trading. The paper analyzes the basic status of securities business market, and it defines the relevant market on securities brokerage business, including region defined and product defined. Followed, it analyzes the direct reason of government regulating the trading commission, and the direct reason is to avoid the vicious "commission battle" and O-commission happening, and to maintain the normal operation of the securities market. Then it studies the market structure of the brokerage business by gathering the relevant data, and comes to a conclusion. It is that China's securities brokerage market is monopolistic competition-based market. And based on it, the paper studies the pricing behavior of brokerage commissions. It finds out the reason why small brokerage firms tend to launch the "commission battle" in the monopolistic competition market structure. The paper also explains the necessity of government regulation on brokerage trading commissions in the market failure view and economics view of government regulatory. Based on the current situation and reason of the commission regulatory, it indicates the effect of government regulation on brokerage commissions. The author finds there will be bad affects on the regulatory if the brokerage firms use the schemes such as commission discounts, commission returning and so on. The government regulation on the brokerage commissions may lead to the inadequate competition among the brokerage firms, and it even may lead to make the price-fixing cartel on commissions. In a way, the regulatory may make the vulnerable commission alliance more stable. Therefore, the paper comes to a conclusion that is the effect on the government regulatory to brokerage commissions is not obvious, and may even lead to some adverse effects. Finally, the author proposes some suggestions on the government regulation to the brokerage commissions. Hopefully, as the securities industry develops healthily and the securities market mechanism improves, government will gradually unleash the minimum brokerage commissions regulatory, and let the brokerage firms price the commission independently. Make the market mechanism play an important role in the process. Meanwhile, enhance the legal supervision on the government regulation to the brokerage commissions, and establish and improve the relevant laws and regulations, in order to form an effective monitoring mechanism on brokerage commissions.