Legal Regulation Of Credit Derivatives Of China

With the deepening of global financial innovation, the financial derivatives have developed so fast since 90's of the 20th century, which played a significant role in promoting the development of the global financial market. Credit derivative is a new species of financial derivatives. The emergence of credit derivative provides a new model for solving the credit risks of commercial banks.The article consists of four parts:In the first part, it analyzes the concept of credit derivatives, the development and classification of credit derivatives as well as the feasibility and necessity of China developing credit derivatives using empirical methods. The feasibility mainly based on the analyzing of China's current policy trends, the experience of China developing other financial derivatives, and the elaborate applications of credit derivatives by commercial banks in China. The necessity mainly based on the analyzing of the development of global financial market and the credit issues of China banking. The study of this part is intended for paving the way for the settlement of related issues below.The second part is an important part of this article. This part mainly analyzes the legal nature of credit derivatives. This section analyzes the legal nature of credit derivatives mainly based on two aspects: the legal relationship of credit derivatives and the legal character. It deems the credit derivative is one of the aleatory contracts, but it differs with the insurance, gambling and other aleatory activities. This part is also intended to pave the way for the part below.The third part is the most important part of this article. Basing on the second part, it discusses the legal environments and legal obstacles of China developing credit derivatives. The legal environments mainly involve two aspects: the environments of the over-the-counter trading and the transaction on exchange. The legal obstacles China facing to develop credit derivatives mainly include the legitimacy of credit derivatives, the validity of net settlement, the challenges tax laws will meet and other issues.The fourth part is the problem solving one. This section mainly analyzes the improvements of related systems and the legal framework on China developing credit derivatives. China need improve the subject system, behavior system, regulatory system, the intellectual property protection and other related systems of credit derivatives; the improvements of the legal framework mainly include law, statute, rule and regulation aspects.This article comprehensively adopts the positive analysis method, the case analysis method, the jurisprudence analysis method and other research methods.