A Study On Supervision Law System Of Financial Holding Company Related Transactions

With the development of finance sector and fierce competition, traditional mode of segregation of financial business has hindered the efficiency of economy and its healthy development. In order to adapt to the tendency of mixed financial business, many countries has deregulated the supervision, positively seeking the new mode of achieving mixed operation in the existed framework of law system. With this background, as a transition style from segregation operation to mixed operation—financial holding company comes to our eyes. It has many obvious particularity compared with common holding company. Finance sector is the important support of the state's economy, whether it could develop smoothly would influence the state's economy as well as the security of our state.From the angle of organizational structure, financial holding company itself is the combination of related enterprises. Although related transactions have so many advantages to some extent, it still always crosses the border of laws and regulations when driven by some motive, which explores its potential risks. There are various kinds of non-legitimate related transactions in the practice within our financial holding company; it has already become the tools of transferring interests among the related parties. For instance, unsecured loan among related financial institutions, banks make loans to security company to buy new shares in the share market, holding company get money through its subsidiary bank institution in the way of repaying to invest in its other subsidiary companies and insurance company uses the convenience of security company when making use of the funds, all of these dangerous singles have alarmed the supervision authority.Besides, financial holding company could form strong market power through related transactions, even gain monopoly position, which cause social inequality, undermine the principle of fairness, bring conflicts of interest. Once the transaction fails, the risks it produce would bring domino effect, the spreading of these risks could make finance sector and the state bear a high price. This article elaborates the necessity of supervision on related transactions of financial holding company from the dual point of legal analysis and financial analysis based on the inspection of financial holding company's related transactions condition in our country, and then put forwards the supervision objectives properly.The article adopts the method of comparison analysis, learns from a great deal supervision experience of foreign countries, and draws on their valuable experience based on the localization, works out the phases focused long-term strategy according to the maturity degree of our finance development. At last, it proposes some suggestions on how to prefect our state's supervision law system of financial holding company related transactions, including enhanced obligations of financial holding company; setting funds firewall; emphasis the construction of industry self-regulation and so on, in order to make some contributions to our research and practice.