Legal Regulation Of Financial Derivatives Research

Since the 1990s of the 20th century, crises and frequent storms in the financial derivatives market have caused widespread concern in the international community, the legislation was further strengthened. This paper carries out the regulation studies of financial derivatives transactions as the main line, takes the United Kingdom, the United States and other Western countries as the focus of her research, puts forward countermeasures to legal regulation of financial derivatives of our country in comparing with the practices of Singapore, South Korea and other countries of the emerging financial derivatives transactions. Apart from introductory text, it is divided into eight chapters.The three preceding chapters are mainly study of financial derivatives, its exposition of the basic issues of legal regulation and the regulatory system.Chapter 1 is about the detailed investigation of the definition, types and functions of financial derivatives, the analysis of the objective basis and developing dynamic of modern financial derivatives. The focus is on the analysis of current financial derivatives trading and risk, the international community's study of financial derivatives and its legal and regulatory proposals, as well as the further strengthening regulatory trends.Chapter 2 is about the basic problem of legal regulation of financial derivatives. In this chapter, we can see the analysis and discuss of the legal regulation of financial derivatives basing on economics and special causes, the legal nature of financial derivatives and the legal nature of its legal regulation, the objectives and basic principles. As part of the financial markets, there exist the situation of monopoly, the market information asymmetry, public goods nature and the external market in financial derivatives markets as well, which lead to a result of market failures and make the state's legislative intervention necessary. Legal regulation of financial derivatives is actually adjusting social relationships which originally belong to private aspects. Legal regulation of the market can make the market mechanism fully play its role to achieve the established function through eliminating the defects, reduce the possibility of systemic risk and promote socio-economic development.Chapter III is research of the regulatory system for financial derivatives. Legal regulation of financial derivatives is of the financial supervision and regulation areas. The basic performance of its regulatory system is "dual control" mode of combination of government regulation, self-regulation of the traditional financial supervision and regulation. The three-tiered regulatory system of government regulation, self-regulation of the exchange and trade association internal management is still in the mainstream of the international financial derivatives market supervision system, but in the specific design of the structure, there is not a fixed, static model. Every country builds its regulatory system of financial derivatives basing on their historical development and practical features to suit to its own economic development, and monitors the system with the development of financial derivatives. This chapter deals primarily in the multi regulatory system of the United States under the guidance of government supervision and the United Kingdom's self-discipline-oriented single regulatory system, the common features and development trends.Chapter 4 to chapter VI is discus of the regulation of financial derivatives transactions. It is the focus of this paper.Chapter IV analyses and compares the financial derivatives market access control system of the United Kingdom and the United States from the market establishing, product access and intermediary.In the establishing of market, the majority of countries adopt a unified examination and approval system, the"Commodity Futures Modernization Act of 2000"successfully introduced an approval system on the derivatives market segmentation and hierarchical management which enhanced regulatory efficiency and flexibility.The regulation of products is to solve two major problems: the scope of regulation and the listing. In the scope of regulation, the majority of countries base on the exchange products, as to the forwards and swap transactions are suspected to be regulated or not, different countries have different criteria for judging. In the regulation of listing of the new contract, countries and regions can be divided into three broad approaches. France, Japan, Singapore, Spain, Canada, Hong Kong and other countries and regions are of typical"approval"mode; Germany, Italy, Australia, Switzerland and other countries are similar to the"approval system"; the United Kingdom and the United States are of record-keeping system. As to intermediary supervision, the government regulatory authorities are responsible for licensing but the emphasis is different, some focus on risk control, some pay attention to the legitimacy audit, and others focus on the protection of market participants.Chapter V is mainly of analysis of the different perspectives of the risks of trading financial derivatives and the regulation of the transaction intermediaries, exchanges, market participants and other market player object.From the sources of risk, derivatives risk can be divided into two types of legal risks and financial risks. Different from the suitability principles in security market, the intermediaries of financial derivatives transactions are required to comply with risk revealed principle. Financial derivatives exposure is mainly concentrated in the trading and clearing areas, it is fundamental to establishing a better exchange trading and settlement system for risk management. The innovation and mechanism of financial derivative instruments challenge the traditional uniform external supervision. Establishment of sound internal risk control mechanism is of the risk monitoring component. The adequacy of regulatory capital for market participants and the regulation of legal risks are also the focus of this chapter.Chapter VI is about the regulation of the disclosure of information. Information disclosure regulation of financial derivatives poses a challenge to the traditional accounting theory. This chapter deals with the legislative development and research practice of United States and the international community on the regulation of the disclosure of information. It details the conceptual framework of the financial derivatives quantitative information disclosure regulation and the regulatory requirements of qualitative information disclosure.The study of legal responsibility is indispensable to research of the legal systems of financial derivatives. Chapter VII analyzes the form and features of legal liability of financial derivatives, gives us a detailed discussion of offense of financial derivatives regulation and legal liability for the violations. The main financial derivatives regulatory violations include illegal market, insider trading, front running, market manipulation and other customer interest fraudulent acts, in which acts of insider trading and market manipulation have become the focus of regulation and front running has attracted increasing attention in recent years.Chapter VIII of this paper is about the development process of the past and modern financial derivatives transactions of our country, the analysis of the system environment and the risk characteristics of the current financial derivatives transactions, and the proposed countermeasures to legal regulation.First of all, we should improve the three-tier regulatory system of supervision of the government, industry association internal management and exchange self-regulatory. Second, we should build our financial derivatives regulatory system of laws and regulations, formulate a unified"Derivatives Transactions Law". Finally, In view of the shortcomings of existing information disclosure system, we should build an all-round and multi-level information disclosure standards for financial derivatives , which is in the basis of accounting standards, focuses on listed companies, centers for risk disclosure and with financial institutions as the main.