The Study Of The Supervising System Of FX Derivatives Market In Our Country

As a valuable tool of avoiding exchange-rate risk and guaranteeing price congenially, the FX Derivatives have market risk, credibility risk, liquidity risk, management risk and legal risk. The interaction of all the risks will cause serious instability to the FX Derivatives Market.However, the international FX Derivatives Market grows rapidly as the result of the effective and fully developed supervision system of FX Derivatives Market. The developed countries built their supervision systems in FX Derivatives Market, which maintain the prosperity of their FX Derivatives Market. But the supervision systems are not based on the initiative choices but on the way followed by the first step. The supervision systems of FX Derivatives Market in different countries stress on different aspects. The essential part of 2-level supervision and 3-level supervision is the combination of governmental supervision and industrial self-supervision. The difference lies in the coordination of the two, such as governmental supervision, industrial association and exchanges self-supervision.Differed from the international fully developed FX Derivatives Markets; China has just begun to develop its FX Derivatives Market. In order that the market in the right way at its beginning and avoiding the abusiveness of FX Derivatives, the swappers must control their own risks, and an appropriate supervision system should be built based on conditions of our country. The present FX Derivatives Market supervision in China has made some progress, while there are still some insufficiencies such as lack of scientific nature of supervision rules, the unreasonable supervision principles, and the in complete supervision systems. All the insufficiencies shows that we need to built a complete supervision system of FX Derivatives Market. The reformation in the exchange rate of YMB brings both progress and risks in the FX Derivatives Market in our country.The built of supervision system in FX Derivatives Market must take political, economical, cultural factors into consideration. So, the writer believes that China should follow the legal way that guided by government. The country should pass a law with top effect to form the FX Derivatives Transaction supervision systems, which follow the method of centralized supervision, organized supervision, and functionalized supervision. We should make clear what is under the supervision and who should take the responsibility. What is more, a 3-level supervision system is needed, that mainly based on the governmental supervision, industry self-supervision, and exchange markets'self- supervision. In addition, the cooperation of international supervision and the training of the foreign exchange persons are needed to ensure the safety and efficiency of the legal system in the FX Derivatives Market of China.Chapter one analyze the risks and features in global FX Derivatives Markets. Part one is about the growth of the world FX Derivatives Market. Firstly, the writer makes a summary of the features of FX Derivatives Market, which is the out-of–the-counter transactions are far more than in-the-counter transactions in the aspects of varieties and proportions. However, the situation is changing with the adjustment of in-the-counter transactions. So, we should weigh both transactions at the same value. On the other side, the paper analyzes the growth of international FX Derivatives Market, comes to the conclusion that it is the multi function of the global supervision. So the writer believes the development of FX Derivatives Market is based on an effective supervision system, which can solve the problems of the inefficiency of FX Derivatives Market. Part two analyzes the risks in FX Derivatives Markets, that they are multi risks of market risk, credibility risk, liquidity risk, management risk and legal risk. So the FX Derivatives Market needs financial supervisions.Chapter two compares the FX Derivatives Market supervision system in developed countries. We come to a conclusion that we should define the range of governmental supervision and industrial self- supervision, and we should take the costs and incomes into consideration. The writer believes that the essential part of 2-level supervision and 3-level supervision is the combination of governmental supervision and Industry Self– supervision. The supervision of FX Derivatives Market is an organic system, so it is important to coordinate the relationship of the three.Chapter three reviews the history of the supervision system in FX Derivatives Market in our country, which indicates the importance of enforcing the supervision system. There are five inefficiencies in the present supervision system in china: 1. the lack of scientific nature of supervision rules, the unreasonable supervision principles, 2. we weigh too much on governmental supervision and neglect the Industry Self– supervision, 3. the prohibition of congenial transactions and administrative examination and approval are suspected in practice, 4.the lack of foundation of supervision such as accountant systems and information disclosure system, 5. the lack of cooperation with the international supervision.Chapter four discusses the ways to complete the supervision system in china. The built of supervision system in FX Derivatives Market must take political, economical, cultural factors into consideration. So, the writer believes china should follow the legal way that guided by government. It is better for china to build a 3-level supervision system based upon governmental supervision, industrial self-supervision and exchange markets'self-supervision. And the training and cooperation of the people in this area is also important.