Research On Credit Risk Management And Control Mechanism Of Margin Business Based On Credit Derivatives

In China,Margin lending business has gradually grown after more than ten years of development,especially in recent years,investors in China’s capital market have become enthusiastic about margin trading,and the penetration rate of Margin lending business in China is getting higher and higher.In 2021,the balance of Margin lending business in China will reach 1.9 trillion yuan,and the speed of Margin lending business funds is getting faster and faster.This mechanism of buying short and selling short gives investors a new trading mode.However,there is no doubt that the margin mechanism of Margin lending business has increased the leverage of investors and increased the risk for all parties involved in the transaction.It can be said that there are many litigations in the history of China due to the forced liquidation of Margin lending business.Forced liquidation will bring a huge blow to all parties involved in the market.Regarding the credit risk control of margin business,capital market regulators are also constantly proposing new regulatory requirements and measures.Among them,in January 2022,the China Securities Association issued relevant documents,pointing out the dual attributes of leverage and trading of margin trading,and requiring securities companies to take into account market risks and credit risks in managing the risks of double financing business,and listing the concretization measures for supervising the credit risks of margin business,which shows that it is important and urgent to increase the management of credit risks of margin business.This paper focuses on the credit risk of securities companies in the margin business,conducts a detailed analysis of three cases such as Changjiu Biochemical and Letv Blow-up,analyzes the credit risk status of the securities companies in the cases,and then analyzes the innovative methods of introducing credit derivatives to manage the credit risk of the securities company’s margin business.The specific ideas are as follows: First,on the basis of background investigation,literature research and theoretical study,the idea of introducing credit derivatives into the margin business is proposed.Secondly,the necessity of introducing credit derivatives into the margin business was demonstrated,and the main content included two aspects.The first is a detailed analysis of the development trend of China’s margin business,including the institutional design and development status of China’s margin business,and a Granger causal test of whether stock price fluctuations will affect the credit risk of margin business.The second is to interpret the case of the explosion of the margin business,mainly including the reasons for the occurrence of the case,the financing margin situation involved and the risk of the securities company in it,and then the existing credit risk management methods of China’s margin business are insufficient.In addition,the process interpretation of how to introduce credit derivatives into the margin business has been concretized,mainly for the credit risk mitigation tools and credit default options that are most used at this stage.Finally,relevant policy suggestions are put forward on how to promote the landing of credit derivatives in the financing and margin business,mainly including system design and landing policies.