On the afternoon of August 4, 2023, Shanghai Kingsta Law Firm held a salon activity with the theme of “An Analysis of the Legal Issues of Securities Margin Trading in Securities Market”.

Metron Wang, senior partner of the Firm, firstly introduced the definition and transaction mode of securities margin trading, and the multiple legal relationships of borrowing, lending, guaranteeing and brokering in securities margin trading; emphasized the guarantee function of money and securities as collateral for the realization of claims, and at the same time interpreted the controversy of doctrines and differences of judgments on the attributes of claims guarantee in the process of the development of securities margin trading in China and how to examine the legal nature of the existing securities margin trading in the viewpoint of the reconstructed guarantee system of the Civil Law Code；at the same time, how the method of perfection of collateral in securities margin trading should be identified was also elaborated; and finally, the conditions and procedures of forced liquidation of positions by securities companies and their legal risks were analyzed, and personal suggestions were made for the protection of the rights and interests of ordinary investors.

This salon activity triggered the discussion on typical and atypical guarantees in the guarantee system of the Civil Code, and especially the colleagues exchanged views on the guarantee practices in the fields of mortgage, margin account, financial leasing, recourse factoring, etc. Some colleagues commented on the duration, order and conditions of forced liquidation of securities on margin by securities companies, and also expressed their opinions on the KYC(also “Know Your Client”) obligations of securities companies, which should fully protect the legitimate rights and interests of financial investors.

This salon activity inspired the legal service team to deeply analyze and master the inner underlying legal logic of the design and operation of financial products in the securities market, enrich the multi-dimensional knowledge of financial products and improve the professional level of legal services.