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Taiwan ’s stock market will be listed at regular intervals, TWSE- or TPEx-listed securities has undergone continuous major declines, suspension of trading, or mandatory delisting due to mismanagement, fraud, false financial reports, manipulative acts to influence the trading prices of securities, etc. When customers fail to perform settlement after the transaction is made, the securities firms will also suffer losses as a result of credit business. Therefore, the main purpose of this thesis is to conduct risk management process in the daily credit business and to prevent risks in advance.
This paper starts with a review of the evolution and development of the securities market, explains the sources of risks in the securities industry, and discusses the credit business risks from the perspective of securities firms. This thesis discussed the management process and the competent authority's four major credit business of securities firms: "Margin Purchase and Short sale of Securities, Non-restricted Purpose Loan Business, Securities Lending Business, and the Securities Business money Lending" Then, the risk control procedures of the case company were compared and found the shortcomings of the case company's credit risk management practices. Accordingly, this thesis intends to formulate a management method that takes into account the business development and risk reduction.
This paper found that in addition to following the laws and regulations, the credit management methods of case company only use experience and intuition to control high-risk securities and high-risk customers, and there is no effective set of pre-prevention and post-management measures to assist business personnel reduce risk in the process of sprinting business. At this time, if you grasp the two most important control factors of the credit business: "collateral and counterparty", you can add more quantitative management factors to manage risks more comprehensively without compromising business flexibility. In terms of collateral, the five additional quantifications for 1. concentration in securities firm, 2. concentration in the market, 3. market liquidity, 4. ETF special management measures, and 5. collateral quality enhancement measures management factor; in terms of counterparties, 1. set a credit limit for a single client (including related accounts), 2. set a credit limit for a single client (including related accounts) holding a single security, 3. identify the relationship by holding the same securities account (head-of-person account) 4. further identify and deal with high-risk customers with risk factors.
The abnormal situation of the securities market can be learned from the transaction information of related parties. Therefore, this paper recommends that the competent authority should conduct more sophisticated monitoring of the transaction records and warn the customers and securities firms in advance. In addition, Non-restricted Purpose Loan Business is the new credit business of securities firms, follow-up researchers can start from the characteristics of the business and formulate a different risk management mechanism from Margin Purchase and Short sale of Securities for their business characteristics. |
