On the usufruct transfer of the credit business of securities companies in China

The usufruct transfer of the credit business of securities companies has the advantage of flexible financing time without size limit, so that it has become the important financial source of securities companies in China. The rapid expansion of usufruct transfer has remodeled the profit model of securities companies, pushed up the securities industry leverage, and enhanced correlation between securities, banking and insurance industries. However, the business has related risks. For example, it can increase the asset-liability ratio and management difficulty of liquidity of securities companies; and inadequate disclosure of business data can cause the difficulty to identify the risk; furthermore it is vulnerable to policy implications for bank capital. The paper puts forward the specification, the development countermeasures and suggestions of usufruct transfer business: perfect liquidity assistance mechanisms, prevent systemic risk; establish and improve the business rules, strengthen business data disclosure; expand the securities company financing channels furthermore, reduce the securities companies' reliance on usufruct transfer business; and actively promote the asset securitization business of securities companies to carry out the margin profit.