Study On The System Of Error Trades Cancellation Of Securities

Unusual trading of securities is an abnormal condition in trading activities ofstock market. Developing up to now, the stock market has evolved into a highlytechnical, systematic, sensitive and huge system. Besides the traditional risk factorssuch as force majeure, accidents and so on, error trades resulting from increasinglyfrequent technical failures and human errors, have become the main causes of unusualtrading of securities. Not only do error trades of securities directly impact the interestsof trading parties, but also impact the interests of other market participants morebroadly and impact the centralized trading function and order of the market. However,the system of error trades cancellation of securities, which is widely established andmaturely developed overseas, is still a blank in China’s legislation. In recent years, thefrequently occurring error trades in China’s stock market, have laid the practicefoundation and bred the system-claiming. Study on and establishment of the system oferror trades cancellation of securities has been an important subject before supervisors.However, by now the system of error trades cancellation of securities is still a newfield of study in China, and there are few relevant research achievements. This paperis aimed at a comprehensive and careful study on this system, exploring its theoreticalbasis, finding the characteristics and rules therein and then obtaining someenlightenment.This paper has five chapters, and its logical structure is as follows: Chapter1: The System-claiming for Error Trades Cancellation of Securities inChina and Its Theoretical Basis. Firstly, the author analyzes the system-claiming forerror trades cancellation of securities in China by reflections on the current system ofthe disposal of unusual trading of securities, finding its problems and pointing out thenecessity to introduce the system of error trades cancellation of securities. Secondly,the author examines the theoretical basis of the system of error trades cancellation ofsecurities, including its value basis of order and fairness, and its establishmentprinciples of publicity, promptness and balance.Chapter2: The Application Conditions of Error Trades Cancellation of Securities.This chapter is the comparison and analysis of the relevant regulations about theapplication conditions of error trades cancellation in the rules of stock marketsoverseas. According to its cause, error trades can be divided into system errors andhuman errors; and according to its presentation, error trades can be divided into priceerrors, quantity errors and other errors. And the judging standards to cancel errortrades include factors of price deviation, quantity, losses and so on.Chapter3: The Disposal Procedure of Error Trades Cancellation of Securities.The system of error trades cancellation of securities, especially the procedure of errortrades cancellation, can affect the fairness of the market and the confidence of themarket participants. So the fairness of the procedure is extremely important in thecancellation of error trades. This chapter is a review and summary of the relevantregulations about disposal procedure of error trades cancellation in the rules of stockmarkets overseas. According to the exercise manner of the cancellation, its procedurecan be divided into cancellation by authority and cancellation by application. And thecancellation procedure can be divided into entities of application, procedures ofapplication, judgement, remedy and so on.Chapter4: The Legal Liability of Error Trades Cancellation of Securities.Although the purport of the system of error trades cancellation does not focus on caseintervention, the cancellation of a trade which has been concluded is bound to affectthe interests of trading parties. Should the stock market be responsible for the lossescaused by the cancellation? And could the party suffering from the cancellation ask the party who caused the error trades to compensate for its losses? These questions arewhat we must settle in this study, which are discussed in this chapter.Chapter5: The Enlightenment of the Introduction of the System of Error TradesCancellations of Securities in China. From the above research, this chapter putsforward the author’s enlightenment on the establishment of the system of error tradescancellation of securities in China, such as establishment of legal basis, more attentionto the coordination with other market rules and the cooperation with other markets,change of the legislation idea oriented by regulation and perfection of the design ofthe legal liability of the stock market.