What is securities margin?

What is securities margin? Securities are a collective term for a variety of economic equity certificates, and also refer to specialized types of products. There are many types of securities, and there are certain risks. Let me share with you what securities margin is, let’s learn about it together. What is securities margin 1

What is securities margin

The so-called margin, in the actual securities market, refers to the deposit in the designated trading account opened by the customer for on-site transactions. A certain amount of capital is invested as a guarantee for securities dealers and traders to buy and sell securities on their behalf. The essence of margin is that the client promises to the securities firm that it has sufficient funds for the securities firm to buy and sell securities on its behalf, and that the client will bear the adverse consequences arising from its designated transactions within the scope of the margin. Therefore, it is essentially a form of capital-based financing. The limit is a form of credit guarantee.

Basic information on securities margin

Securities trading margin is a special case of ownership in my country’s civil law theory. Traditional civil law theory adheres to the principle of unity of ownership and possession, but securities The ownership of the trading margin is owned by the customer and is occupied by the securities firm when it is in the margin state. As long as the funds are in the margin state, the securities firm's possession of the funds cannot affect the customer's ownership form. In this state, any entity, including securities firms, that disposes of the funds without the customer's consent will violate the customer's ownership of the margin.

The ratio of securities margin

The role of securities margin

The central bank of a country can control bank credit by changing the securities margin ratio scale, thereby achieving the purpose of controlling the market money supply. Increasing the securities margin ratio means that the ratio of loans secured by securities from commercial banks to the central bank has been reduced, thereby achieving the purpose of reducing the scale of credit in the entire society.

The higher the margin ratio, the smaller the credit scale. When the central bank believes that securities speculation is excessive and security prices are too high, increasing the margin ratio can suppress market demand and cause prices to fall. On the contrary, when the securities market is down, the margin ratio is reduced.

Relevant regulations

Chapter 4 Margin and Collateral

Article 32 Members who provide financing and securities lending to customers shall charge a certain proportion of Security deposit. The margin can be offset by the underlying securities and other securities recognized by the Exchange.

Article 33 Securities that can be used as margin shall be converted based on the market value or net value of the securities at the following conversion rate when calculating the margin amount:

(1) SSE 180 Index The maximum conversion rate for constituent stocks shall not exceed 70%, and the maximum conversion rate for other A-share stocks shall not exceed 65%. The conversion rate for A-share stocks subject to special treatment and suspended from listing is 0%;

（ 2) The maximum conversion rate of exchange-traded open-end index funds shall not exceed 90%;

(3) The maximum conversion rate of government bonds shall not exceed 95%;

(4) Other listed securities The maximum conversion rate for investment funds and bonds shall not exceed 80%;

(5) The conversion rate for warrants is 0%. What is securities margin 2

What are securities

Securities are a collective term for a variety of economic rights and interests certificates, and also refer to specialized types of products, which are used to prove the rights and interests of the ticket holders. A legal document that represents a specific interest. It mainly includes capital securities, currency securities and commodity securities. Securities in a narrow sense mainly refer to securities products in the securities market, including equity market products such as stocks, debt market products such as bonds, and derivative market products such as stock futures, options, interest rate futures, etc. The discipline system of securities science is an organic system composed of various branches of disciplines that study the behavioral characteristics and operating rules of the securities market from different angles. It mainly includes two major research fields: traditional securities theory and evolutionary securities theory.

Securities

Securities are legal certificates with a certain par value that prove the ownership or claims of the security holder or a specific entity designated by the security. Banknotes, stamps, tax stamps, stocks, bonds, treasury bills, commercial promissory notes, acceptance bills, etc. are all securities. However, the securities trading mentioned in the general market should specifically refer to the securities regulated by the securities law, such as banknotes, stamps, tax stamps, etc., which are not within this scope. Securities transactions are limited to the scope of securities under the Securities Act. There are two main methods for judging and predicting securities market prices: fundamental analysis and technical analysis. Because the users of the two methods are completely different in theory and operation, they are also called two schools of thought.

Securities are a general name for various types of property ownership or debt certificates. They are certificates used to prove that the security holder has the right to obtain relevant rights and interests based on the content on the face of the ticket.

Therefore, the essence of securities is a transaction contract or contract, which entitles the contract holder to take corresponding actions according to the standards stipulated in the contract and obtain corresponding benefits according to the provisions of the contract. rights to proceeds.

The essence of securities is a transaction contract. The main contents of the contract generally include: the subject matter of the transaction between the parties to the contract, the quantity and quality of the subject matter, the price of the subject matter of the transaction, the time and place of the subject matter of the transaction, etc. .

Of course, if these contents are applied to different specific securities, the stipulated contents will be different. For example, forward contracts and futures contracts have different provisions.

Classification

According to their different natures, securities can be divided into three categories: evidence securities, certificate securities and marketable securities. Evidence securities are simply written documents that prove a fact, such as letters of credit, evidence, bills of lading, etc.; certificate securities refer to the identification of the holder as the legal right holder of a certain private right and the certification that the obligations performed by the holder are valid. Obligation of written certification documents Valid written certification documents, such as deposit slips, etc.

Marketable securities are certificates with nominal balances that are used to prove that the holder or a specific entity designated by the security owns ownership or bonds of specific property. The main feature that distinguishes the above two types of securities is that they can transfer.

Basic characteristics

Securities are essentially civil rights with property attributes. The characteristic of securities is that civil rights are expressed in securities, so that rights and securities are combined, and rights are embodied in securities, that is, Securitization of rights. It is a legal phenomenon in which the right holder's method and process of exercising his rights is expressed in the form of securities, a social phenomenon that symbolizes the investor's investment property, and a sign and result of developed social credit.

Securities must be associated with a specific form of expression. In the development process of securities, the earliest basic way to commend securities rights was paper. Specific rights were represented by words or graphics on special paper slips.

Therefore, securities are also called "documentary evidence" and "documentary evidence". However, with the rapid advancement of the economy, especially the development of electronic technology and information networks, modern society has become "paperless" in securities. Securities investors almost no longer own any securities in the form of physical bonds. The number of securities or securities rights are recorded in the investor's account accordingly. The development process from "paper-based securities" to "paperless securities" reveals the huge difference between the concept of modern securities and the concept of traditional securities.

As a written certificate that commends certain civil rights, securities have the following basic characteristics:

Securities are certificates of property rights.

Securities represent rights certificates with property value. In modern society, people are no longer satisfied with the direct possession, use, income and disposal of wealth, but pay more attention to the ultimate dominance and control of wealth. Securities, a new form of property, emerged as the times require. Holding a security means that the holder has control over the property represented by the security, but this control is not direct control, but indirect control.

For example, if a shareholder holds shares of a company, the shareholder has control over the company's property according to the proportion of the shares he holds to the total number of shares issued by the company, but the shareholder cannot claim It has the direct right to possess, use, benefit from and dispose of a specific company property, and can only enjoy the owner's rights to benefit from the assets, make major decisions and select managers in proportion. In this sense, securities are the product of capital aggregation with the help of the development of market economy and social credit, and securities rights exhibit the nature of property rights.

Securities are negotiable certificates of rights.

The vitality of securities lies in the liquidity of securities. Traditional civil rights have always faced many obstacles in the transfer. As far as civil property rights are concerned, since it does not involve personality and identity, its transfer is not indispensable in nature, but its transfer is a complex civil act.

For example, due to the civil rule of "relativity of claims", claims as a manifestation of property are transferable, but creditors must notify the debtor when transferring claims. This kind of transfer involving the interests of three parties is subject to legal regulations Adjustment is not quick and easy. However, once civil rights are securitized and property rights are divided into several equal shares of the same quality, creating a "commodity with uniform specifications", then this kind of property transfer is no longer limited to transfer according to the agreement between the transferor and the transferee. Transfers are carried out on a wider scale and with higher frequency, even through open market transactions, resulting in a highly developed property transfer system. Securities can be transferred multiple times to constitute circulation, and their risk-avoiding function can also be achieved by converting them into currency. The liquidity of securities is the basis for the smooth development of the securities system.

Securities are income-generating rights certificates.

The ultimate goal of security holders is to obtain income, which is the direct motivation for security holders to invest in securities. On the one hand, the security itself is a property right, reflecting specific property rights. The security holder can obtain income by exercising this property right, such as dividend income (stocks) or interest income (bonds); on the other hand, , security holders can obtain income by transferring securities, such as buying at low prices and selling at high prices in the secondary market. Securities holders can obtain income through price differences, especially speculative income.

Securities are risk-based certificates of rights.

The risk of securities is reflected in the possibility that investors will not be able to obtain expected income or even suffer losses due to changes in the securities market or reasons caused by the issuer. The risks and returns of securities investments are related. In the actual market, there are risks in any securities investment activities, and there is no investment that completely avoids risks.

Securities companies

Securities companies - provide channels for investors to buy and sell stocks.

As ordinary investors, we actually come into contact with securities companies most often. We open accounts with securities companies and use their intermediaries to buy and sell stocks. In fact, the positioning of securities companies in the stock market is very much like a department store, which facilitates the buying and selling of consumers. So you can go to the securities company next door to watch the market and buy and sell, instead of going to the stock exchange to trade in person!

So, can all securities companies help investors buy and sell stocks? Answer: No.

General investors must buy and sell stocks through securities companies, but this does not mean that all securities companies are engaged in the business of intermediary stock trading. According to the classification of projects operated by securities companies, securities companies can be divided into four categories:

First, securities brokers, that is, securities companies that help investors buy and sell stocks.

Second, securities underwriters help companies go public and issue stocks. If investors want to buy new stocks issued by the company, they must find this type of securities company.

Third, securities dealers, like ordinary investors, are also traders of stocks. One type of legal person we generally call is a securities dealer.

Fourth, comprehensive securities firms are securities companies that operate the above three businesses at the same time.

A securities firm that engages in the business of buying and selling securities on behalf of clients is an intermediary between securities investors and the securities market. The source of profit for securities brokers is the fee income collected from investors who entrust securities trading, called commission. Countries generally have certain regulations on commission income. Securities brokers have rich professional knowledge and securities investment experience, and have extensive sources of information and high efficiency. Ordinary investors have little understanding of the securities market, small investment amounts, and cannot directly enter the securities trading market. It is best to buy and sell through securities brokers as agents. A possible path.

Risk analysis

1. Operational risk

Since commission income from brokerage business accounts for a large proportion of the total income of securities companies, securities companies are dependent on brokerage business. The volatility of the secondary market has increased, and the fluctuations in the secondary market have a greater impact on the income of securities companies. When the market is down, fixed costs (such as communication costs, venue rent, etc.) remain high, and operational risks emerge.

The results of the 2000 annual member inspection of the Shanghai Stock Exchange show that only 32% of the 96 securities company members were classified as good members in the annual inspection. Compared with 1999, the overall scale and profitability have improved to a certain extent. , there are still nearly ten securities companies experiencing losses or close to losses, and a considerable number of securities companies have net assets below the average level. They still need to be further improved in terms of asset operation safety, legal and compliance operations, and internal control.

2. Business expansion risks

With the deepening of standardization, marketization and international reforms in the securities market, securities companies have adopted a series of measures to expand their business in fierce competition. , facing greater risks:

(1) Financing from customers. Since the method of overdrafting funds from customers has been strictly prohibited, disguised overdrafts of funds occur from time to time (such as using treasury bond transactions to finance customers, etc.), and some even cooperate with bank authorities to make financing activities difficult to detect.

(2) Commission rebate. Commission rebates increase operating costs. Once the market goes bad, commission rebates become a burden to save costs; rebate account processing sometimes involves returning cash, which leads to many management loopholes; rebate ratios are also highly arbitrary, which increases This reduces the difficulty of standardized management; at the same time, some of the rebate tax collections only withhold personal income tax, but do not withhold income tax or business tax, leaving hidden dangers.

(3) Provide guarantee. Some branches of securities companies provide guarantees for customer loan funds. Since the guarantors are relatively hidden, they can only be discovered when the capital chain breaks. At this time, the risks faced by securities companies are already very serious.

(4) Three-party supervision. Some securities company branches implement three-party supervision (one client provides funds to another client to buy stocks, and the securities company branch supervises the client's stocks to ensure the safety of the other client's funds). This is an act not allowed by the Securities Law. Supervision agreements are not protected by law, and supervisory behaviors are not recognized by regulations. Once a dispute occurs, securities companies are very passive.

(5) Business innovation. In pursuit of expanding scale and increasing market share, securities companies have carried out a series of business innovations and formed strategic partnerships with banks, insurance and other institutions. Business innovations have encountered challenges from many aspects including technology, consulting, training and promotion. Challenges, risk control becomes more difficult.

3. System network risk

With the widespread application of network information technology in the securities industry, and with the continuous deepening of business innovation in the securities industry, whether the network is safe, reliable, convenient and efficient become increasingly important.

However, securities companies' risk control and risk resistance capabilities are still not optimistic.

Securities underwriting business is one of the main businesses of securities companies. Because the project cycle is long, it is greatly affected by unpredictable market factors. With the strengthening of supervision, the joint and several liabilities of securities companies have increased, and the company’s various Increased risk.

If there is insufficient research on the operating conditions and development prospects of listed companies, the recommended company will fail to issue securities, which will cause the securities company to suffer the risk of loss of profits and reputation. Wrong judgment on the trend of the secondary market results in unreasonable stock price positioning or bond interest rate and term design that do not meet market demand. The stocks underwritten by securities firms cannot be sold; or when the securities company becomes a major shareholder of a listed company during the issuance of additional shares, the securities company's funds Being heavily occupied creates financial risks.

As the B-share market will take the lead in becoming a fully-circulated market, the B-share underwriting business will have greater development. If underwriting responsibilities are fulfilled, foreign exchange risks may also arise. Over-packaging listed companies, making mistakes in information disclosure, misleading investors, and creating risks of violating laws and regulations.