Regulation Research On Chinese Stock Index Futures Market

The value line futures contract was introduced by Kansas City Board of Trade (KCBT) in 1982. After 28-year's development, stock index futures has become one of the most successful financial derivatives in international capital markets. It proves to play an important role in avoiding risks of financial capital, improving the function of the stock market, and promoting the development of the financial system. Nevertheless, international experience shows that it is also exposed to new risks. Without proper regulation, it will not only harm the capital market itself, but also endanger the national financial system, even the real economy. Therefore, it has long been a project under research in countries how to regulate the stock index futures scientifically and reasonably so as to improve its development smoothly.With the rapid growth of the Chinese economy and more opening up of the capital market, the domestic demand of financial instruments to avoid risks becomes more and more urgent. After five-year's preparation, China's HS300 Stock Index Futures was finally launched in April 2010. It has changed the long pattern in China's stock market, playing an active role in improving and stabilizing the internal market mechanisms, promoting financial innovation and expanding the width and depth of capital markets. It is a milestone in the history of China's financial development. In the meantime, the global economy fluctuates in the wake of the financial crisis. International capital may take advantage of appreciating RMB in order to speculate or avoid crisis, resulting in impact on the mainland China. Both he research about stock index futures, which is a high-risk derivative itself, and the experience of operating it are inefficient in China, particularly lack of empirical analysis based on actual transaction data and systematic research. Therefore, it's a great challenge faced by the management how to balance the development of stock index futures and its regulation at the beginning period in China based on the adverse background domestically and internationally. It is also the topic of this dissertation.The dissertation is concerned about the regulation of China's stock index futures market, focusing on the practical problems aroused after introduction of stock index futures. The dissertation studies the regulation of China's stock index futures market from the macro-perspective to the medium-perspective and then to the micro-perspective, based on which it develops strategical and tactful solutions aiming at specific problems.At the beginning period of China's stock index futures market, the regulation framework is newly established, which needs improving. The real effect of regulation measures is to be observed and improved according to specific conditions. Based on the real market status in quo after the introduction of the stock index futures, the dissertation studies China's stock index futures market from the perspectives of regulation system, regulation institutions and measures, contract design and trading rules, so as to make the regulation more effective and more matching to the real market situation. Main arguments and conclusions are as follows.Firstly, from the perspective of macro-regulation, the regulation mode of "one dollar three-level" widely adopted in world stock index futures markets also applies to China, while necessary adjustments and complements are needed according to the status in quo in China. The dissertation attempts to construct a new regulation system for China's stock index futures market, adjusting the regulating emphasis and expanding the regulation rights of the second and third layers, so as to make the regulation system function comprehensively.Secondly, the dissertation develops several main measures to enhance regulation from the medium-perspective, including coordinating regulation in both the futures market and the spot market, educating investors, and enhancing the direct regulation of the exchange.Thirdly, the dissertation, from the micro-perspective, analyses the contract design and trading rules based on the real transaction data of China's CSI 300 Index Futures. Improving suggestions are raised at last, including reducing the contract multiplier of current 300 yuan/point or developing small-sized stock index futures contract in order to meet the demand of medium and small investors, reducing the price limits or subsection settings,setting Circuit Breaker system to reducing Regulatory lacunae and Prevent speculation.The dissertation, combining theory and practice together systematically, studies the regulation of China's stock index futures market in reference to the foreign experiences and China's status in quo. Conclusions and suggestions are developed cautiously to improve and enhance regulation, which is a reference to the market management. They may have active effect on the improvement of regulation of China's stock index futures market and the promotion of the healthy devotement of the market.