A Study On Legal Issues Of Financial Derivative

The emergence and development of financial derivatives is one of the most significant symbols of the financial innovation in 20^th century, in that it has changed the structure and the trend of traditional financial market, totally. The legal system of financial market is distinctly influenced as well, which is now ardently discussed theoretically and practically.The paper comprises three parts, the preface, the body and the epilogue. The preface describes the functions of financial derivatives, the purports of paper, and the methods for study. The body consists of three chapters. Chapter One, the study of basal issues about financial derivatives, comprises four parts as follows. Part One introduces the definition of financial derivatives, in purpose of leading to a general understanding of the topic. Part Two analyzes the characteristics of financial derivatives, in which the legal characteristic is accentually discussed. Part Three talks about the main forms of financial derivatives, in views of economical and legal sense, and the forms of financial derivatives in banking area in practice. Part Four focuses on the role of banking in the market of financial derivatives, regarding the banker as a main. Chapter Two discusses about the legal risks of financial derivatives, in purpose of studying the risk management and regulations over the monster of financial derivatives, which also falls into two parts. Part One introduces the varieties of the risks. Totally, the risks can be classified as economical and legal ones, according to the reasons why the risks arise. Part Two studies the methods of legal control over the risks, in which both inner control and exterior control are analyzed, and different opinions of supervision over financial derivatives in the domain of banking. Chapter Three is about the legislation of financial derivatives. In This chapter, the author first analyzes the necessity of developing the financial derivatives market and the main legal obstacles we meet in China, especially introducing the reasons why the bankers make use of financial derivatives, And then, she points the importance of legislation for developing the financial derivatives, introduces the experience of developed financial derivatives market in foreign countries, and finally proposes specific advice to perfect the legal system. The final part of the paper is epilogue, which is a retrospection of the paper and a clue for further study.