On the path to achieve our margin: horizontal comparison and forward

Summary: margin business to start is to improve China's capital market has a far-reaching measures, so as to China's stock market "unilateral market" situation to an end this article on our history and introduction of margin trading The main impact of a brief summary, based on the popular focus on the decentralization of foreign credit brokerage, securities finance companies focused on specialized credit and securities lending market, three focus modes of the horizontal margin comparative analysis of the system, then there is for to put forward to further promoting China's margin policy proposals for business development with a view to the healthy development of domestic capital markets will benefit.

Keywords: margin, stock market, trading

0 Introduction
At present, China's securities market lacks a reasonable price discovery mechanism, when the investors in a bullish stock market speculation, not leaving their seats when the market, leading to frequent ups and downs of stock market higher risk of systemic .2010 at the beginning, in principle, the State Council margin agreed to set up pilot operations, the Commission will "pilot first, and gradually push" principle, a comprehensive measure of net capital size, compliance management, risk control and other indicators of net capital and the preparations for the pilot implementation of the program, choose the best quality stock The first trial margin trading companies in the business. In addition, the stock index futures have also approved. margin will start to introduce China's stock market "short" mechanism, can effectively reduce the volatility of our stock, to avoid vicious spike. the same time, investors in securities prices also profitable, which is China's stock market "unilateral market" situation to an end. With the margin of the ice-breaking sail, its implementation will be the future path of Research a hot topic.

One of China's introduction of margin trading process and its main impact
1.1 release process
"Securities margin trading," also known as "securities credit transactions," including brokerage investor financing, trading and brokerage of financial institutions to the margin of four. We usually mean by "margin", mainly refers to brokers and investors financing and margin trading, investors by providing collateral to borrow capital to buy securities or borrow securities to sell in order to gain spread behavior financing for investors to borrow money to buy securities, repayment of principal and interest due, referred to as "buy space", short selling is to sell borrowed securities, and then due to return and then buy securities pay interest, known as "short selling" . margin is a common practice in overseas securities markets mature trading system, its existence is rational and inevitable, according to statistics, at present, over 95% of the world's developed countries, emerging countries, over 40% of the introduction of margin trading while the margin in our development path is quite tortuous, so far can be divided into three stages:
An early stage since.1998 foreshadowing the end of the State Council banned margin trading, until October 2005 <<Securities Law>> through, remove the restriction on the terms of margin trading, margin trading business to brokerages legalization .2006 July Commission issued a <<Securities pilot margin trading management approach>> This means that the official margin trading system starting in China, paving the way is completed. Unfortunately, however, is ready to come out in the margin when the domestic stock market "bull" makes the margin pilot shelved.

2 real preparation stage .2008 April, the State Council promulgated <<Securities Supervision and Management Regulations ", <<Securities Risk Disposal Ordinance," margin trading business was formally included in the brokerage business, and from account opening, funding margin ratio, collateral collection, mark-to-market system and so, on the margin trading business made it clear that October 5, .2008, China Securities Regulatory Commission announced the official launch of margin trading experiment. Subsequently, CITIC, Galaxy, GF and 11 securities companies has on October 25 and November 8, margin trading business for two whole network test, the results basically reached the expected results.

3) In 2009 the formal implementation phase in mid-January, China Securities Regulatory Commission Chairman Shang Fulin, to make clear that the pilot .2010 margin business on January 8, the State Department agreed in principle to carry out the pilot securities companies and the introduction of margin trading business stock index futures, the Commission will follow, "the pilot first, and gradually push" principle, choose the best quality securities margin trading business for the first trial, and on this basis, gradually expand the scope of the experiment. years of deliberation margin business has finally surfaced March 31, .2010, initial financing margin trading success, marking the opening of China's capital market, a new era, which means the domestic stock market, bilateral trading era begins in earnest.

1.2 Main effects
As a new type of financial derivatives, margin trading is essentially a financial leverage, capital markets, implement the most powerful force is increasing the liquidity of the securities market, securities companies through the inventory of the stock of capital in the hands of the stock market increases money supply and demand, margin trading business gate is expected to usher in the domestic securities industry, a win-win situation. First, the stock market, the introduction of margin trading of capital market transactions directly increase the level of activity for the stock market to open up new sources of funding, which greatly facilitate the trading of securities market activity and market conditions of continuity. "short" mechanism to introduce effective in reducing the volatility of our stock, to avoid the vicious spike. In addition, investors in securities prices also profitable, which is China's stock market "unilateral market" situation to an end. Secondly, the introduction of margin trading business to the maximum extent to meet the demands of the interests of brokerage firms, increased brokerage the profitability of the present brokerage business is the main source of income transaction fees, the stock market downturn will lead to long-term securities comprehensive loss. there is short selling, brokerage customers through margin trading, customers can earn a fee and deposit paid from instructions issued to the financial short selling the securities to return the interest to increase sources of income when the bear market, while trading active trading market, increased trading volume, in turn, increased the broker to carry out Economic and business fee income. shorting mechanism release also provides more investment options, will help improve the investment portfolio brokerage Finally, from the investor point of view, can be used to hedge short selling mechanism, locking investment income, short selling short selling mechanism can be greatly reduced "Zhuanggu "The volatility, or even the end of" dominate "the phenomenon, thereby protecting the interests of medium and small investors.

2 major foreign margin model comparison and reference
Stones from other hills, can learn. The world, successful margin trading, capital markets services to the national minority. On the one hand, the market environment, the legal system is important, is the premise of the rise of margin trading business, on the other proved, designed to meet the conditions of the margin model is the key to success. In general, outside the mainstream of margin trading is broadly grouped into three categories:
A decentralized broker credit model. Decentralized brokerage model is a typical credit market model, on behalf of the United States, Britain and other financial system is open, legal environment, perfect state. Directly between investors and brokerage margin, when insufficient funds or securities brokerage, financial market intermediation can borrow funds or securities to borrow the stock market. In this mode, the main risk of credit trading for the market performance of the main business risks, regulatory agencies just to make uniform rules for the operation of the institutional arrangements and monitor implementation.

2 specialized securities finance company focused on credit models. Centralized credit mode, securities finance companies as the credit trading system, securities and funds transfer hub, bear the associated financial and trading business. Securities finance company's core business is brokerage funds for and securities of the refinancing, the financing needs of investors and trading is still mainly by the broker to meet demand. focused credit model is divided into "single-track system" and the "dual track." The former representative in Japan, the securities finance companies as a hub, all margin trading business must pass a few of the specialized securities finance companies, other financial institutions have the right to apply directly, bypassing the broker and the client can not directly Securities Finance Corporation to finance securities owned by the latter by a small number of securities finance companies and securities companies approved for margin trading business, customers can directly apply to the securities margin finance companies, the pattern is typical of Taiwan to China.

3 centralized securities lending market model in such mode, the exchanges and clearing houses occupies an important position, centralized processing of securities lending business. On the one hand, the exchange mode of use of reverse repurchase stock in order to standardize the securities lending agreement or reverse repurchase agreements to share centralized auction trading, investors can bid up between the SBL, and then through the exchange of the matching system matching, registration Company responsible for the settlement of the stock, short selling and margin account of securities by the Exchange to monitor short selling now, the Athens Stock Exchange to take this model on the other hand, can also be organized by the Securities Depository and Clearing Corporation's loan. Clearing up stock lending market, selecting securities available for lending, loan portfolio can be established, qualified investors can borrow or lend securities in the market, Switzerland, Singapore, South Korea and other markets to take this pattern.

The three models are described in margin transactions, we can not rely solely on brokerage, brokers can not leave the direct credit, credit can not be completely centralized model, can not indulge the credit spread, there must be some macro-control measures special attention is outside the securities lending market in recent years, a new approach to development, that is, by the exchange or centralized registration and settlement institutions and organizations of the stock lending market, which shows the margin must be based on different regional situation of national conditions, properly designed, can have a strong vitality. Links to free download http://www.hi138.com 3 margin to further promote China's policy proposals for business development
3.1 carefully select the appropriate operation of their own national conditions and margin trading patterns
China's 2008 revised <<Securities Supervision and Management Regulations>> the margin into the business scope of securities companies, but also provides securities margin trading business company should have the five conditions, which shows only a small part of the Securities can be approved for margin trading business organizations, securities companies are not the rest of the business license. In addition, the regulations also stipulate that securities firms engaged in margin trading business, lack of own funds or securities, securities finance companies can borrow to This provides the company has established a securities and financial position, so the whole, China is similar to the pattern established in Taiwan, China implemented the "dual track." At present, China's securities market development is still in its infancy, the market operation mechanism is not perfect , the legal system is not perfect, market participants self-awareness and self-discipline is relatively low, it is difficult to directly market-based margin mode, choose a similar pattern is conducive to Taiwan because of China's securities market to prevent immature, weak credit market, regulatory and other defects caused by imperfections of the market risk, but also like Japan to avoid a "single-track system" brought about by the shortcomings of market monopoly, market competition is conducive to margin to form a healthy market, it should also pay attention to China belongs to the reality of transition economies, securities companies is different from other countries in many places, such as the issue of state-owned shares, A, B share issues, banks, brokers, listed companies, mainly state-owned holding, etc., and therefore establish their own mode should fully take into account China's specific national conditions, "feeling the stones" in practice with Chinese characteristics, establishing a sound financial securities company system.

Wang Fuling, Li Wei, Luo Guoqing (2009 pointed out that China should take the leading securities finance company focused on credit as a transitional mode, until the markets mature and then gradually to market-oriented model, therefore, advocated the establishment of securities finance companies should pay full attention to the transition resistance from Japan, Taiwan's experience, the company has an active securities market, financial intermediation and risk control has played an important role, but with the gradual maturity of the securities market, its limitations have become increasingly prominent: on the one hand, it margin declining market share, the other in the operation of the business can easily lead to a large, heavy responsibility, the status of risk concentration, and, in itself as an "imposition" of an intermediary hub, improve the cost margin , reducing the efficiency of market allocation. Since the margin of market-oriented system is the final choice, the establishment of securities finance companies as a transitional bridge in the design of the system, it should make it as lean and easy to adjust and transition in the functional on, as far as possible to adopt a market-oriented mode of operation, to reduce excessive government intervention to prevent excessive concentration of power and responsibility.

3.2 subject to further expand the scope of margin involvement
With the "margin" of the brewing launched, the parties have been put forward various operating policies. The subject of domestic margin constraints are: exchange traded full months, the flow of financing to buy the underlying stock share capital of not less than 200 million shares, or market capitalization of not less than $ 500 million to sell the underlying stock's margin of not less than 200 million shares outstanding capital stock or market capitalization of not less than $ 800 million, the number of shareholders not less than 4,000 average daily turnover in recent months the average daily turnover of not less than the benchmark index's 20% decline in average daily rise and decline in the benchmark index rose an average deviation of not more than 4 percentage points, and the volatility volatility of the benchmark index of not more than five times. The Shanghai Stock Exchange and the Shenzhen Stock Exchange have provided the initial margin deposit of not less than 50% maintenance margin not less than 130%, if the maintenance margin ratio of less than 130%, must cover their short positions to maintain the margin is higher than 150%. Only over the maintenance margin ratio to 300% of the part of the transfer out from the credit account. From the margin and the margin of the underlying horizontal comparison, China and Japan than the United States should be more stringent and cautious.

January 22, 2010, the Commission issued a <<margin on the business of securities companies to carry out pilot guidance>> clear the application of the first pilot securities companies must meet the net capital of 50 billion yuan through the "full Network test "and meet" a reference a control "and six conditions in the margin trading business through networking test 11 select 6,7 brokerage house as margin trading, the first pilot, scheduled to be completed before the Spring Festival review, "two sessions" will be formally launched margin trading business.

<<Guidance>> margin for the pilot involved in the business access threshold is no longer the customer's requirements, but the authority delegated to the broker. In this regard, the Commission official said, will investors and asset qualifications. " threshold "minimum requirements established by the pilot securities firms according to their own circumstances, strictly controlled. brokerage said that funds are not less than 50 million is likely that the industry standard.

Policies introduced from the relevant parties, although the "margin" is the "long-awaited", but still accompanied by many restrictions, short term, only a few brokers and a small number of powerful high-end investors to play the game, for most brokers and retail investors, the "margin" is still "still holds partly concealed"! To this end, to ensure that the premise of risk control, the next stage should be further modest reduction in the threshold, margin expansion in the main range.

3.3 focus on strengthening and improving various types of risk prevention measures
Gulping, of course, bad indigestion, but not unworthy, stagnating. From the development point of view, when the market reaches a certain size, the legal system tends to improve the conduct of margin trading is the general trend of the international securities market, China is no exception from the "pilot securities companies - Securities Finance Corporation - Full market "is our only way. China's national conditions should be based on local conditions, and gradually improve the margin trading environment, establish a sound legal system margin, through the strengthening of market institutions and securities companies firewall risk control mechanism, strictly guard against all kinds of risk, insurance margin business pilot based on the steady and healthy progress. Reason to believe that as long as do the appropriate risk prevention measures, we will be able to play the biggest margin business effectiveness, enhance the operational efficiency of capital markets.

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