Analysis Of The Derivative Financial Instrument's Risk And Accounting Custody

It was thirty years from the derivative financial instrument occurred in 1972.It expresses to us it's strong life force as well as it' risk. It is just like a two-edged sword. It helps evade and transfer financial risks, but at the same time it generates a new risk. It was brought into China latter than the other countries, so the level of the cognizance of its risk is very low and the eluding game of the risk is not very perfect. At present, most domestic literature on the derivative financial instruments focus on informative introduction, while very few on innovation or transcendence. Most risks of the derivative financial instruments are brought by asymmetrical information to some extent. Accounting exposure can effectively evade the risk about asymmetrical information. We analysis six kinds of asymmetrical information of derivative financial instruments systematically. I bring the model of the agency by agreement and add the selectable factor. We will get out the relation between the assumption of risk by the dealer and the attitude of the dealer treating to the risk. As a management system, accounting can provide financial information to help user to determine. From the accounting custody and the standardization of exposure about accounting, the user of information can gain some information which they are need. So accounting can lighten the risk about asymmetrical information. The Treasury department of China ordered the exposure draft in August 2004. I will expound my opinion and advice from the asymmetrical information view. At the same time I bring an accounting item of the derivative financial instruments to reflect the change of fair value. I also advise to set upan institute and a web as support. I expect that this article will be of some instructive significance for the development of the derivative financial instrument in China.The dissertation comprises three chapters:Chapter one is the introduction part, including concept, character, function, the procession of the derivative financial instruments and the risk of it. It is a procession of cognizance of the derivative financial instrument.Chapter two will analysis six kinds of the asymmetrical information that exist in the derivative financial instrument. At the same time, we will introduce the model of the agency by agreement. We will use the example of the bankruptcy of British Baring Bank to explain the risk.Chapter three will introduce the necessity of the accounting custody and the process of the thesis in China and other countries. I bring forward some opinion and advice. At the same time, we introduce some other ways to evade the risk of the derivative financial instrument.