How do financial securities companies operate?

A securities finance company, also known as a securities financing company, refers to a legal person institution established in the securities market according to law and specializing in securities financing business. Securities finance companies obtain funds from the stock market or banks, and then provide these funds to investors who need financing, and provide the stocks guaranteed by financing to investors who borrow securities according to regulations. As a medium between investors and securities companies, it promotes the activity of the trading market and improves the whole financial system.

Securities finance companies are non-bank financial institutions, and the central bank regards them as commercial banks. Its main business is:

1. Lending loans to maintain the securities market price and lending funds to underwriters for securities underwriting business.

2. Lend the funds or securities needed for transaction settlement through the settlement institution of the stock exchange.

3. Lending funds or securities through securities mortgage.

4. Lend the funds required for subscription to public investors through underwriters.

5. Conduct corporate bond transactions within the prescribed scope.

6. Keep the securities and accept the securities deposit.

The existing securities finance companies in Japan and South Korea were quite successful, which made great contributions to the economic development of these countries at that time. Japanese securities companies can obtain loans directly from commercial banks or other financial institutions when raising funds, but mainly through securities finance companies for credit transaction financing. This mode of financing through securities finance companies is also quite popular in other Asian countries or regions, such as South Korea, China and Taiwan Province Province.

There are three securities finance companies in Japan, namely Japan Securities Finance Company, Osaka Securities Finance Company and Central Securities Finance Company. Korea Security Finance Corporation, founded in 1955, is the only specialized securities financing institution in Korea (under the Ministry of Finance) and the main source of securities credit in Korea. Hua Fu Securities Finance Company was established in Taiwan Province Province of China on 1980 (shareholders are Taiwan Stock Exchange, Bank of Taiwan, Land Bank, Guanghua Investment Company and China Trust and Investment Company), and then three securities finance companies were established, namely Huanhua, CB and Antai.