On The Legal Regulation System Of Local Government Bond Market In China

Local government bond market is an important part of China’s capital market,which also shoulders the important task of making up for the lack of local finance and resolving the local government debt crisis.Before the "Budget Law" in 2014,however,the local government bond market has not received full attention,local government borrowing depends on local government platform margin,its non-normative operation brings huge debt hidden danger to local finance.In order to solve the problem of local government debt,China has revised the "Budget Law" to determine the way of local government debt to issue local government bonds,and vigorously develop the local government bond market.However,there are still defects in the development of local government bond market in China.It is necessary to improve the legal system of local government bond market supervision to promote the further development of local government bond market.The disorderly borrowing of local government leads to a steep increase in the risk of local government debt,and an important means to solve this problem is to establish a sound local government bond market,because the local government bond market can regulate the issuance and circulation of local government bonds,and gradually eliminate the existing local government debt risks.To establish a perfect local government bond market,we must base ourselves on reality and establish a normative legal system of bond market supervision of local government.For the local government bond market regulatory legal system,not only can make people re-examine the relationship between the government and the market,but also can prompt people to develop different from the general bond regulation theory,thus acting on the local government bond market,promote the further improvement of the local government bond market.Due to the great differences between foreign local governance system and financial system and domestic system,the legal system of bond market supervision of foreign local governments is not of high reference significance for the domestic relevant research.However,there is a lack of research on local government bond market,and more focuses on the generation mechanism and coping mechanism of local government debt risk,so it is of great significance to the research of local government bond market and its regulatory legal system.The study of the local government bond market and its regulatory legal system can not only promote the improvement of the bond supervision theory,but also is of great significance to improve the legal system of the local government bond supervision in China.Local government bonds and local government bond market is two different important concepts,local government bonds refers to the provinces,autonomous regions and municipalities directly under the central government and approved by the people’s government at the provincial level since the bonds issued by the municipal people’s government,agreed within a certain period of time of government bonds,it is different from corporate bonds and financial bonds and general bonds.Local government bond market refers to the place where local government bonds are issued,circulated and paid for principal and interest.It includes the primary market and secondary market and will also be divided into floor trading market and over-the-counter trading market.The primary market of local government bond is relatively prosperous,the trading volume of secondary market is small,and the investors are mainly financial institutions,and the credit rating is carried out by a few monopoly institutions.Due to the limitation of the "Budget Law",China’s local government bond market has gradually become the most important way of local government financing,and it has shown a gradual prosperity trend in recent years.However,the issuance,circulation and repayment of local government bonds are all different from the general bond market.Therefore,China’s local government bond market has its particularity,that is,the dominance of government departments in issuing and cashing,the market restrictions in circulation,and the overlapping of market supervision.Many performances of local government bond market failure,such as administrative control of bond issuance,information asymmetry of reverse selection and moral hazard,and profit delivery,regulatory arbitrage and rigid payment,and further explore the legal regulatory reason,namely the lack of regulatory legal system,lack of regulatory coordination mechanism,lack of legal stability,as well as information disclosure and credit rating system,etc.Starting from the theory of public interest,absorb the effective market theory,regulatory capture theory and incomplete theory of legal theory advantages,strengthen the local government bond investor protection,strengthen the budget constraints and prevent systemic financial risk plays an important role in the local government bond market operation,should be determined as the basic regulatory objectives.The legal system framework of China’s local government bond market supervision is composed of the narrow sense of laws,administrative regulations,departmental rules,local laws and norms and self-regulatory norms,It has each played an important role in the regulation of the local government bond market,However,China’s existing local government bond market supervision legal system still has some shortcomings,Further optimization is needed,Specifically including the establishment of the legal basis for local government bond market supervision at the constitutional level,Formulate a unified "Local Government Debt Law",To rationalize the specific role of administrative regulations,departmental rules,local laws and norms and self-discipline in the supervision of local government bond market,Then form a perfect local government bond market supervision legal system.Ministry of Finance,the People’s Bank of China,the CSRC and silver circ regulatory body in the local government bond market regulation have certain regulatory responsibilities,in the state of regulatory body,but from the overall market development and the effectiveness of the regulation,the Ministry of Finance regulation should be in the core position,establish local government bond information sharing system and establish joint disciplinary system form different regulatory coordination supervision mechanism,to ensure that the local government bond market regulation comprehensiveness and effectiveness.Local government bond market regulation perfect specific measures shall include from the issuing mode,issuers and term,interest rates and funds use to improve the primary market,from trading subject restrictions,trading rules and trading risk monitoring improve the secondary market,at the same time through clear information disclosure the scope,content,procedures and responsibility to improve the information disclosure system,and by perfecting the rating indicators and mechanisms,guarantee rating subject independence and standardizing legal responsibility to improve the credit rating system.Through the above ways,the legal supervision system of local government bond market is further improved,and promote the further development of local government bond market.