Securities margin trading

"Securities margin trading, also known as" securities credit trading: broker investor financing, securities lending and financial institutions finance brokerage, securities lending four. Market usually say "margin" refers investors to the Shenzhen Stock Exchange membership of the securities company to provide collateral and borrowed funds to buy the listed securities or borrow listed securities and selling behavior. Edit Summary The economic demon June 18, the margin balance first breaking 60 billion, over 10 million shares financing scale. Eight stocks, financial stocks accounted for five seats, including CITIC Securities and four bank stocks, the first scale of financing is the subject of over 10 billion shares of China Ping An has quietly exit 1 billion club " Add to shortlist Directory 1 Definitions 2 Features 3 Role 4 trading patterns 5 management mechanism 1 Definitions 2 Features 3 Role 4 trading patterns 5 management mechanism 6 impact 6.1 positive impact 6.2 negative impact 7 introduction of margin trading course 8 Operating Precautions 9 brokerage income Interpretation of the 10 instances Margin - Interpretation Margin, also known as "securities credit transactions" refers investors to the securities companies to provide collateral to borrow funds to purchase securities or borrow securities to sell behavior. Including the broker investor financing, securities lending and financial institutions, brokerage margin trading. Financing is to borrow money to buy securities, securities loans to customers to buy securities, customer repayment of principal and interest at maturity, the customer financing to securities companies to buy securities known as "buy empty; short selling borrowed securities to sell, and then be returned to the Securities, Securities The companies lend securities sold to the customer, the customer due to the return of the same type and quantity of securities and the payment of interest, customer sold short securities companies, known as "short selling". [1] International Margin mode basic four: securities financing company model, the investors direct credit mode, mode, and Depository Trust & Clearing Corporation securities company credit credit mode. China Package margin mode including the broker investor financing, trading and financial institutions, brokerage margin trading. Before the amendments to the Securities Act prohibit securities credit trading margin. Margin - Features Margin has the following characteristics 1 leverage. Compared with the common stock, margin simply pay a deposit you can carry out this business. The investors financing by the company with the Securities and financing, to obtain greater profits with less capital. 2 liquidity. Margin trading guide funds to ensure the orderly flow between the money market and the capital market, the efficiency of the securities market. The 3 Credit duality. The existence of dual credit relationships margin trading business, but only allow securities companies to use its own funds and the freedom of securities in margin trading business in China during the pilot, so in the meantime, China is only the first layer of credit relationships. 4 short mechanism. Margin business, investors can borrow shares to sell, and so fell and then buy back the return of securities companies, so investors can also profit fell. The role of the margin - Margin, to play the role of price stability Perfect market system, the credit trading system can play the role of price stability, that is, when the market is excessive the speculative or Zuozhuang, result in a stock price soaring, investors can sell stock short selling, which share prices fall; Conversely, when a particular stock is undervalued, investors can buy shares through margin purchases, thus contributing to the price rise. 2, effectively alleviate the financial pressure of the market Financing channels for securities companies can now fund a variety of ways, and finance liberalization and bank funds into the market will take two steps. The stock market downturn, the fund such needs funds regulated institutions, not only to meet their urgent needs, will also have a pretty good return on investment. 3, to stimulate the active A-share market Margin trading business is conducive to active trading market, the-market stock funds amplification effect is also active in a way to stimulate the A-share market. 4, to improve broker living environment Margin business in addition to brokerage brought a lot of money in commission income and interest margin gains derived a lot of opportunities for product innovation, reduce costs and hedging and proprietary business possible. 5, multi-level securities market Margin system is the basis of the modern multi-level securities market, is also supporting policies to address the structural imbalance between supply and demand must appear in the new old. Margin trading and short-mechanism, stock index futures is supporting linked together, will be huge amplification effect as well as the size of funds and market risk. Credit transactions in the imperfect market system not only does not play the role of price stability, it will further exacerbate market volatility. Risk manifested in two aspects, the the First, overdrafts ratio is too large, and its loss will be doubled once fell; Second, when the market index to go bear credit trading will help down the role. [1] Margin trading - trading patterns American model, including securities companies in securities margin trading, margin trading and securities companies to customers refinancing of funds, securities, two aspects. The refinancing of credit concentration and dispersion of the points. The centralized credit model by specialized institutions, such as securities finance company; refinancing provided by the funds or securities in the financial markets in distributed mode. 1, the dispersion of credit mode. Investors to securities companies to apply the margin provided by the securities company directly to its credit. When securities companies, funds or stock; facility to the financial markets or through standard by getting the appropriate funds and stocks. This model is developed on the basis of the financial markets, there is no agency specializing in the financing of credit transactions. This model as the representative of the United States, the Hong Kong market has also adopted a similar pattern. Centralized credit mode. Brokerage margin for investors to set up a semi-official nature with certain monopolistic nature of the securities and financial companies for securities companies, funds and securities refinancing, in order to regulate the securities market of credit funds inflows and outflows and The amount of securities, flexible management, securities market credit trading activities. Japan, South Korea, represented by this model. 3, the two-track system of credit mode. Japan and South Korea mode in securities companies, only a portion has direct margin license the company can provide customers with margin trading services, then refinancing from securities finance companies. Securities companies without permission can only accept a client, agency client application for margin trading, securities and financial companies to complete the direct margin services. China Taiwan region represented by this model. The distinctive three modes, play an important role in the countries (regions) credit transactions. Choose what kind of credit trading patterns to the degree of development depends largely on the financial markets, financial institutions, risk awareness and internal control level factors. Of Securities credit trading patterns, the selection issue has basically formed a consensus, securities and financial companies led the centralized credit model should be taken as a transitional, specialized service provided to the brokerage margin, and strengthen supervision and control of credit transactions. [2] Margin - management mechanism Margin mode countries to establish a mechanism to control the various risks in credit transactions mainly from the following aspects. Securities qualification. The great difference of different quality and price volatility of the securities will have a direct impact on the level of risk of the credit transaction. The main criteria for selection of credit trading securities is less stock price volatility, liquidity is better, and therefore should choose the stability of the main business, less volatile industry, improve the corporate governance structure, the outstanding capital stock of the larger stock. Margin ratio. Margin ratio is the most important parameters affecting the securities margin trading level of credit expansion, including a proportion of the minimum initial margin and maintenance margin ratio of. The United States under the initial margin ratio of 50% financing to maintain 25% margin and maintenance margin ratio of margin trading, short selling of shares and different. Taiwan specified initial margin ratio of 50%, financing the maintenance margin ratio was 28.6%, short selling maintenance margin ratio of 28%. Expected that the proportion of China's initial margin will be determined to be 50%, the maintenance margin financing and securities lending ratio of about 30%. Limit margin management. The Taiwan model provides total brokerage margin investors should not exceed a certain limit of net capital provisions brokerage financing and securities lending limit on individual securities and their net capital ratio to provide brokerage financing and securities lending limit for a single customer its net capital ratio. Taiwan provides single securities companies the securities of a single financing should not be more than t0%, short selling should not be more than 5% of the customer's total margin can not exceed 250% of its capital. Single stock line of credit management system. Credit line management of stocks in order to prevent excessive margin stock and lead to an increased risk or manipulated. Reference to the experience of overseas markets, when a stock's margin amounted to 25% of its outstanding capital stock, the Exchange should stop financing to buy or short sale, when the ratio dropped to 18%. Below and then resumed trading, when short selling in excess of the amount of financing, margin trading should be stopped until the return to a balanced and then re-start trading. The impact of the margin - Positive impact First of all, you can provide investors with financing, will inevitably bring new funding increment to the stock market, it would be the stock market to generate a positive role in promoting. Secondly, the margin apparent active trading role, as well as improve the market's price discovery function. Financing transactions are the most active in the market, the most part, able to explore market opportunities on the market and reasonable pricing, rapid response information will play a catalytic role. Turnover of U.S. and European markets financing transactions accounted for about 18-20% of stock market transactions, the Taiwan market accounted for 40% and sometimes, therefore, the introduction of margin trading will have a great role in promoting active on the entire market. The introduction of short selling mechanism will change the original market unilateral market situation conducive to the market price discovery. Again, the introduction of margin trading provides investors with a new profit model. Financing so that investors can leveraging their investments, while short selling allows investors to achieve profitability when the market fell. This offer investors a new profit model. Negative impact First, the margin may have implications for help or increased market volatility. Second, it is possible to increase the systemic risk in the financial system. Brokerage income First, the introduction of margin trading will greatly improve the trading activity, so as to bring more brokerage income securities companies. According to international experience, the margin generally give a revenue growth of 30% -40% of the securities brokerage business. Second, margin trading business can also become an important business of securities companies. In the United States in 1980, all brokerage income, 13% from the interest income of the investor financing. Higher in Hong Kong and Taiwan, can reach more than 1/3 of the total income of the brokerage business. Of course, the comparison of the United States in 2003 and 1980, the securities company's revenue structure found financing interest income declined from 13% to 3% financing interest income is not necessarily enough lasting, known as the main source of income of the securities company. And if the establishment of specialized securities and financial companies with a certain monopoly, this part of the interest income may be more to the securities and financial companies, and securities companies refinancing can be obtained spreads will be relatively small. Margin system, only part of the securities company licensed to provide investors with margin trading, for qualified securities company, you can enjoy this new business earnings, but are not eligible securities companies may face the loss of customers, Therefore, the margin of the pilot and the gradual introduction of the Securities Brokerage will inevitably cause further concentrated. Margin - the margin launched course March 30, 2010: Shenzhen and Shanghai Stock Exchange informed the pilot margin trading was officially launched on March 31. January 8, 2010: The State Council has agreed in principle to set up pilot margin trading. October 31, 2008: Securities Regulatory Commission issued the securities business scope of approval Interim Provisions ". October 5, 2008: SFC announced the launch of a pilot margin trading. April 25, 2008: Supervision and Management Regulations "of securities companies, securities companies risk Disposal Ordinance introduced. On April 8, 2008: SFC securities firms risk control indicators management approach "to further regulate the securities outlets" (draft), "securities company branch regulatory requirements (for trial implementation)" open comments. September 5, 2006: "margin contract essential terms and conditions" and "margin trading risk disclosure statement Mandatory Provisions published. August 29, 2006: CSI Gordon released the "China Securities Depository and Clearing Corporation Limited pilot margin trading Registration and Settlement of the implementation details. August 21, 2006: "margin trading pilot implementation details released. June 30, 2006: SFC a securities company margin pilot management approach "(effective as of August 1, 2006). Margin - Operating Conditions Margin business processes, the speed and extent of the share price correction vote short sales may cause a panic, cause the market to follow suit and sell-off, which will make investors out of unwinding pressure rather than voluntary lighten up. Therefore, investors should try to avoid large-scale short sales should be especially careful, especially in a market downturn. 2, the the retail funds and bondholders amount of all relatively small, and therefore, under normal circumstances is only suitable for institutional investors based on the short sales of short motives; retail investors only adhere to long-term bearish stocks, or follow the trend of the broader market downstream when short selling short, but must be spotted stocks with the general trend, otherwise the risk would be greater. Fell process, investors hold stocks often deep-set, but lack of funds to cover their short positions to driving down the cost of ownership. 4, margin trading data can provide the market with the latest trends weathervane. When brokerage firms forced liquidation or off investors credit accounts, investors will lose the opportunity to return to profitability in the market rebound to recoup their losses. The margin - brokerage income First, the introduction of margin trading, will greatly enhance the trading activity, so as to bring more brokerage income securities companies. According to international experience, the margin generally give a revenue growth of 30% -40% of the securities brokerage business. Second, margin trading business can also become an important business of securities companies. In the United States in 1980, all brokerage income, 13% from the interest income of the investor financing. Higher in Hong Kong and Taiwan, can reach more than 1/3 of the total income of the brokerage business. Of course, comparing the United States in 1980 and 2003, the securities company's revenue structure can be found, financing interest income declined from 13% to 3% financing interest income is not necessarily enough lasting called a securities company's main source of income. And if the establishment of specialized securities and financial companies with a certain monopoly, this part of the interest income may be more to the securities and financial companies, and securities companies refinancing can be obtained spreads will be relatively small. Margin institutional arrangements, financing interest income will be relatively limited, but in any case, within the margin trading in China has just introduced a considerable period of time, will give the securities company to provide a new revenue channels. China is likely to draw on the two-track mode, the only part of the securities company licensed to provide investors with margin for qualified securities company, you can enjoy this new business earnings but are not eligible Securities companies may face the loss of customers and, therefore, the pilot of the margin and gradually introduced to further focus will inevitably result in the Securities Brokerage. Margin - instance interpretation If investors to finance its investment in the margin of 5,000 yuan, the investors from financial brokerage office was 10,000 yuan. Thus, the investors financing after the total market value of $ 1.5 million. If investors want to short selling, the existing act as the market value of the securities margin of 5,000 yuan. Then the market value of the securities, the investors can melt was 10,000 yuan, the total market value after the short selling 1.5 million. Loss more margin calls Provisions margin ratio, the Shenzhen Stock Exchange also requires customers to maintain a guaranteed 130%. Instances of interpretation: Prevail in the previous example, customer margin, market capitalization of $ 1.5 million, if one day the total decrease in the market value (ie financial funds or securities market value of 130%) of the 1.3 million, the broker will require additional margin, or forced liquidation. .撤消修改