International Legal Supervision Issues Of Options Financial Derivatives

With the booming development of financial derivatives in the modern financial system,it is necessary to supervise the financial derivatives because of its various risks. Since 1990s, many critical incidents and trade storm occurred in the financial instrument market, which captured governments'attention and the legal supervision system was gradually built up. And with the development of global financial market, most countries realized it's impossible to deal with financial supervision on one's own. As a result, the international supervision of financial instrument was formed on a higher level. This essay focuses on the international legal supervision of options. By studying the examples of developed countries like the USA and England, it gives some advice on the improvement of legal supervision system of options in china.The whole essay is divided into five chapters.The first chapter first describes the concept and division of financial derivatives, then compares options with other kinds of financial derivatives, mainly forwards and futures. After that, it explores the development history of options and further explains the various functions of options. At last, the essay analyzes the legal character of options by integrating opinions of many experts.The second chapter mainly analyzes the risks of options. By explaining the basic risks of financial instruments, such as credit risk, market risk, liquidity risk, operation risk and legal risk, it further discusses the specific risks of options. Besides, by describing the critical incident happened during the development of options, especially the incident of CAO, it gets the conclusion that the legal supervision of options is necessary.The third chapter first discusses the basic supervision system of options, and then analyzes the multi-supervision institutions system of options in USA, which is also called centralized supervision system. The system includes government supervision, rules of options exchange, self discipline of securities dealers and the legislation system of options. This chapter further introduces the single supervision system of England, including the legislation system and its self-discipline oriented supervision system. At last, by comparing the two different supervision systems, it gives some advice on china's supervision system.The forth chapter focuses on the international cooperation of option supervision, especially the international uniforms of OTC market, including ISDA and FEOMA. And then it introduces the Basel Committee's efforts in legal supervision of financial derivatives, including《Basel Agreement》and《Risk Management Directory of financial instruments》. It further describes china's efforts on the international supervision cooperation of financial derivatives.The fifth chapter focuses on the construction of china's legal supervision system of options. By analyzing options development condition now in china and the argumentation of feasibility of developing options in china, it raises the overall path of options development in china. At last, by analyzing the flaw of the existing option legislation system in china, it brings forward the correspondent advice on china's legislation.