The Legal Supervision Of High-Leveraged Hedge Fund

With the sharp development of financial globalization and the wide use of financial derivatives, there are growing tendencies for international capital to transact more freely and bigger in size worldwide. Actually, international idle fund such as hedge fund has exerted great influence upon the international financial system as well as each independent state.This paper has detailed descriptions towards the definition, characteristic, category, and operation of high-leverage and legal regulation mode for hedge fund and finally expressed the attitude of the author and corresponding suggestions. This paper is to be divided into six chapters, including the introduction, chapter one to chapter four as well as the closing statement, the content of each part are as follows,The introduction mainly contains the writing motivation and purpose.Chapter one is an overview of hedge funds. This chapter briefly introduces the definitions of hedge fund and then goes to its origin and evolution, composition and type, and then describes the characteristics, and its internal operations.Chapter two is the operation of highly leveraged hedge funds. It is the main part of this paper. It mainly analyzes the reasons why high leverage is used in hedge funds and exposes its negative effect with the case of LTCM as an example.Chapter three is about the necessity of regulation over highly leveraged hedge fund resulted from its possible negative effect. Then the regulation systems of hedge fund in major countries and its current trend are analyzed.Chapter four is on the development and regulation of highly leveraged hedge funds in china. The status quo leads to the need for regulation. At last, the overall arrangement and details of the regulatory system of highly leveraged hedge fund are proposed.The closing statement re-states the opinions on the legal regulation of high-leverage hedge fund.