On The Improvement Of China's Regulations On Overseas Sales Of Financial Derivatives

Currently in the scope of the world and China, transaction of financial derivatives showed an activated trend. Overseas exchange of financial derivatives in China, mainly rely on overseas accounts trust and acting. The course of transaction concerns regulation on market access, sales and supervising. Problems of rules of financial derivatives transaction still exist. Regulations on market access ignore protecting the investors and restrict the innovation of financial derivatives; at the same time, sales rules of financial derivatives are not enough; in addition, supervising of financial derivatives lacking unified supervision approach.Regulation on market access of financial derivatives including two parts:legal issuance and sales subject of financial derivatives and legal financial derivatives requirements. The requirement of issuance and sales subject of financial derivatives are different due to ETD or OTC market. In the aspect of legal financial derivatives, requirements are different because of futures or securities. Britain defines derivatives of futures clearly, while America doesn't. But generally speaking, derivatives of futures are mainly contract of futures and options. Derivatives of securities in British law are mainly equity securities and debt securities and other derivatives. In American law derivatives of securities are mainly options and structured derivatives. Instead of dividing derivatives in to futures and securities classes, Japan regulates the requirement of underlying assets of financial derivatives. Based on the comparative study before, China should perfect the derivatives market access mechanism. Financial services institutions should abide by the rules when they sell financial derivatives. The sellers should do more obligations, such as fit obligation and demonstrative obligation. The sellers have the obligation to put forward the appropriate investment advice for the customers, also have the obligation to tell their clients the nature and risk status of the financial derivatives. To do so, it can prevent the sellers who have the information advantage from inducing their investors to make unsuited and uncomprehending investment decisions. China needs to establish derivatives sales behavior standards and clearly define the prohibited acts when the sellers sell financial derivatives. The sellers are supposed to shoulder the obligations of explaining the nature and risk status of the financial derivatives and try to understand their clients before a sale in order to market more suitable derivatives as well.Britain, America and Japan control financial derivatives market by the ways of government regulation and industry self-regulation. Government regulation in Britain is a kind of unified supervision mode, in order to control the whole financial system in a unified supervision system, in order to eliminate duplication and oversight of supervision; however, America adopt a diversification supervision mode. In addition, Britain, America and Japan also have there industry self-regulation about approval standards, information disclosure and other regulation. China should establish a unified supervision approach; meanwhile, industry associations and exchanges should be given full play in self-regulatory norms.