Studies On Legal Issues Of Regulation On The Sovereign Wealth Funds

The study on the supervision of sovereign wealth funds (SWFs) shall be started from nature of SWFs and their investment activities. As a result of the financial globalization and global economic imbalances, the sovereign character and the giant size of SWFs have attracted much attention. Due to their sovereign and commercial character, the requirement of the regulation of SWFs has been influenced by various appealings of interests. How to grasp the eccentials of the regulation of SWFs from the hot debates is a task of the academia and the SWFs.On clarifying the meaning of SWFs and their characters, this article tried its best to deepen the study of the regulation of SWFs.In chapter I, the author analysed the definition and characters of SWFs, and the historical reasons of the rise of SWFs and their trends, analyzed the attention and the debates to SWFs, and discussed the frame of the regulation of SWFs. SWFs are funded controlled by the foreign exchange assets owned by the government by a country, managed according to market principals, mainly invested as medium and long-term investors. SWFs have both sovereign and commercial characters. The reasons of the rise of SWFs include the shortage of the international monetary system, the financial globalization, the occurrence and the spreading of the subprime crisis, the global economic imbalances and the depreciation of US Dollars. Due to the influence of the subprime crisis, the sizes of SWFs are bigger and bigger, commercial management is becoming a main trend, and their investment areas are becoming broader and broader. The sovereign character and the giant size have attracted much attention to their potential risks to international financial market and caused the debate on whether it is necessary to supervise the SWFs and how to regulation them. The regulation of SWFs involves the relationships between the home country, the host country and the target companies, and involves the governments of home country and host country, and also some international orgnizations, and the content of such regulation includes the regulation of establishment and the regulation of management.In chapter II, the article probed into the theoretical foundation of the regulation of SWFs. The theoretical foundation of the rise of SWFs includes the theory of the international capital flow, the national economic rationality and the new state capitalism theory. The theoretical foundation of the opposite of the regulation is the financial liberalization theory. The theoretical foundation of the regulation of SWFs includes the theory of incompleteness of the financial market, information economics and the theory of the negative externalities of financial system. The changes in the area of financial regulation have also influenced the regulation of SWFs and to some extent put forward the birth of the international rules on the regulation of SWFs.In chapter III, the legal problems of the regulation of SWFs in home country were discussed. The regulation of SWFs in home country can be divided into two parts:the regulation of intiation and the regulation of daily management. The regulation of intiation includes the regulation of the legal frame of SWFs, the legal status, the goal of management and the independence of SWFs. The regulation of daily management includes the capital system of SWFs, the investment system of SWFs and the risk management of SWFs.In chapter IV, the legal problems of the regulation of SWFs in host country were studied. The regulation of SWFs in host country can be divided into the regulation of access and the regulation of their operation in host country. The regulation of access includes access industries and the national security review. The regulation of SWFs's operation in host country includes transparency and information disclosure, the compliance and so on. Due to the close relationship with home countries, the sovereign immunity right in host countries was alo discussed in this chapter.In chapter V, the author expounded the problem of the international harmony of the regulation of the SWFs. The reasons for the international regulation of SWFs are the giant size and quick development of SWFs, the lack of international regulation rules on SWFs and the needs of the global financial governance and so on. The author compared the various projects on the regulation of SWFs, and commented the newest fruit of the international regulation of SWFs-< Santiago principales>.In chapter VI, the author offered some suggestions for the development of the Chinese regulation system on SWFs. For China, developing SWF can reduce the pressure of the management of the foreign reserves, diversifying the periodical risks and heignten the influence in international financial market of our country. Meanwhile, the exterior environment of the development of Chinese SWFs is becoming severer and severer, the uncertainty of the future of international regulation, the balance between transparency and confidentialty, and how to realize scientifical governance. On these disscusstions, the author offered suggestions for the development of the Chinese regulation rules on SWFs.