| During the recent several years, institutional investors in China have developed greatly, both in amount and in size. Domestic scholars have paid continual attentions to the issues related to institutional investors along with the development of institutional investors. In my opinion, there are still two important issues deserve further researches: one is how the institutional investors can succeed in their efforts to improve the informational efficiency of security market, and the other issue is how to ensure the safety of China's financial markets, as more and more foreign institutional investors get the permission to invest in China's security market, and that some of the investors might invest or speculate in multi-markets in China and in the world. As to the first question, my research goes in two steps. First,I assume that institutional investors have no fraud behaviors, and make some analyses about weather institutional investors can successfully improve the efficiency of security market, and come to the conclusion that rationality of institutional investors is the key for institutional investors to improve market efficiency. On the basis of theoretical analyses, my concerns go to the practical cases related to rationality of China's security market, and the regulation of fraud behaviors is also touched in this part of research. About the second issue, my research goes around the informational asymmetry between domestic and foreign institutional investors, and after deep research with preference to a rational expectation equilibrium model of contagion and Hong Kong's experience of regulation, my two suggestions are: it is necessary to permit domestic institutional investor to invest in international capital market and that corresponding regulation among regulation institutions are critically important in their efforts to successfully regulate world institutional investors' speculation in multi-markets in one country or world-wide.
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