| Since 1970s, Financial derivatives has been deemed as the most valuable and energetic part of world financial market. Nowadays, financial derivatives market can be seem not only in developed countries, but in some developing ones. All of the markets built around the world are connected by computers and Internet. In some ways, financial derivatives are a signal of the trend of financial market development, also a prosperity symbol of financial market in a country. It can helps to decrease the cost of trade,to stabilize financial market, and to promote the development of economics. In a report of BIS, in the year 2008,the world-wide market for derivatives has been more than $ 592 trillion.Although financial derivatives have so many advantages and such a tremendous points of quantity in global market. It is still difficult to truly realize that these man-made invisible products have such unimaginable risk that can ruin the world financial system. Financial derivatives are produced from certain types of different financial assets and basic financial deals. When people try to control or observe, at least, they will find out that though they have many laws that useful before and so many powerful government departments still cannot complete that work. In fact we don't have effective measures now on regulation of it. The bankrupt of Barings Bank and Lehman Brothers Holdings are the two representative examples which told us that we must strength the supervision of financial derivatives deals, both in legislation and self-discipline.In China, there are also lots of banks and enterprises, even state-owned or private, trying to make some financial derivative deals. Obviously, they deliberately ignored risk of the products. Because the lack of powerful regulation made them forget that how dangerous things they did. Through the essay, I hope to conclude some experience of developed countries and international institutions and make some progressive suggestions to legislation.
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