Risk Management Research Of Stock-secured Financing Business In Chinese Trust Company

According to the statistics of China Trust Industry Association andthe author’s statistics, the domestic trust industry is almost constantlyrefreshed to an annual asset growth of more than1trillion yuan scalerecord since Y2008, of which the average annual compound growth rateof last five years is51%. By the end of Y2012, the domestic trust industryassets reached7.47trillion yuan, which caught up with that of theinsurance industry, leading the trust industry to the second largestdomestic financial industry. Meanwhile as one of the business types ofearly development of domestic trust industry, the stock-secured financingbusiness have also developed by leaps and bounds. According to thestatistics of Wind software and the author’s statistics, the average annualcompound growth rate of trust Company pledged items of the last fouryears is72%, which is far more than that of the market as a whole overthe same period, which is26%. As for pledged shares, the average annualcompound growth rate of trust companies of the last four years is63%, which is also far more than that of overall market over the same period,which is27%. In Y2011, trust companies even broke the situation of themarket in the past, which was dominated by banks.However, since Y2012, in the almost unilateral down market context,the pledges of shares in the stock-secured financing business faced withthe challenge of insufficient collateral value. Besides, the largestshareholders pledged shares in a scrolling and high proportion way,which dragged trust companies. Those problems not only sound the alarmof the stock-secured financing business, but also reflected the industry’spotential problem of the lack of risk management capabilities for thiskind of business. Therefore, as becoming to play a major role in thefinancial industry, the urgent need for the trust industry is to enhanceawareness of risk management, improve risk management capabilitiesand risk management chain, so as to ensure the rapid and steadydevelopment of such business.By reviewing the history and analyzing the current situation, thearticle praised nowadays achievements and expected people’sconsciousness of risk management at the same time. Secondly, the articlecombed the main risks facing the domestic stock-secured financingbusiness. Through a combination of specific cases, it emphasized themain point of risk and proposed targeted risk control recommendations.Finally, the article introduced VaR method to calculate pledge rate, which is one of the key risk control tools of the business. The method isexpected to provide risk control metrics of practical significance for thedesign and subsequent management of such business.