| Shanghai and Shenzhen Exchange formally made the first transaction of margin trading on March 31 2010,which represented the new era of margin trading in China.Also,margin trading as a new business carried out in China accelerates the growth of financial industry.It has been only six years since the introduction of margin trading in China and the new business develops very fast.The security companies that qualified to do margin trading business have expanded orderly and rapidly,and they make profit from margin transactions.Additionally,the fuctions of capital market in China have been imoproved gradually over last decade.However,Chinese stock market crash in 2015 was mainly caused by the disadvantages of short selling and leverage of margin trading.More than one thousand stocks’ prices fell dramatically in June and August 2015 and many listed companies had to stop their stock transactions to avoid the crisis,which led to the severe illiquidity of Chinese stock market.Many professional people in financial industry think this crisis was mainly caused by margin trading.As a result,it is necessary and important to review the development process of margin trading,solve the potential problems of margin transactions,and analyze the risks of margin trading.This paper deeply studies the management system of margin trading in China through documentary analysis method,case analysis method and data analysis method,and analyzes the potential problems of margin trading based on the daily margin trading business in Dongguan Security Company.The main risks of margin trading in China are credit risk,operational risk,imbalanced development of margin trading business and risks of Internet Finance.Moreover,this paper makes recommendations based on the integration of theory and practice.The suggestions include improving the rules and regulations of margin transactions,increasing capital investment to margin trading business,developing refinancing business,carefully checking customers’ credit reports,improving the credit scoring systems and setting up early-warning mechanism.Through the research on risks of margin trading,security companies pay more attention to internal risk control and management of margin trading business,which is the key to a security company’s profit,success and prosperity.In summary,it is significant to study the risks and risk control of margin trading,which is meaningful to the health of Chinese financial market and the protection of investors interests. |
