Study On Law System Of Warrants Regulation

Warrant is one of derivative securities and a contract between the issuers and the bondholder. The bondholder has the rights to purchase or sell a certain amount of underlying asset according to the agreed time and price. As the only derived variety of the spot market, warrant brings to the market hedging instruments as well as intensified risk, but the rise and development of warrant around the globe is a fact and irresistible trend. Therefore, regulators should bring out its positive side and avoid risks. The most effective method is to set up the system of risk monitoring, and reduce risks to the extent bearable to the market, making sure the healthy and orderly development of the market. In 1992, China launched warrant products which were later halted by CSRC because of excessive speculation. In 2005, warrant was finally re-launched and became the focus of the whole market because of its scarcity and prosperity of T+O. Though warrant exists in a small number, it is very necessary for CSRC to supervise the mainland market when concerning the great scale of transaction and the limitation of investors knowledge on warrant. By now, the only warrant regulations of China are《Administration of Warrant Service Tentative Procedures》issued by Shanghai and Shenzhen stock exchange respectively and the notification released by another few stock exchanges. However, these norms are just disciplinary rules without a high legal level and far from perfection. Researches on warrant regulatory system are rare, especially those from legal perspective. The paper aims at giving some advice on Warrant Risk Supervision by drawing on the experience of developed countries and regions and combining it with the reality of our country.The paper is divided into four parts:Part 1: general introduction to the significance of research, current research situation at home and abroad, research methods and purpose.Part 2: basic theories of warrant, mainly on basic elements, function, classification, comparison with other financial instruments, legal quality and relations of issuing, guarantee, transaction and execution of laws.Part 3: the necessary of warrants legal regulation and the selection of models, analysis on market risks, credibility risks, time risks, liquidity risks and market manipulation risks, pointing out the problem of the disfunction of warrant legal regulation. Part 4: component of legal system of warrant regulation comparing and learning from three aspects: supervision of warrants issuing, supervision of transactions, supervision of information disclosure, and getting some enlightenments about warrants regulatory system.Part 5: evaluation of China's warrant supervision legal system and suggestions for the betterment of it. Comments on the deficiencies from supervision of warrants issuing, transaction, information disclosure and so on, suggestion for the betterment of the system based on China's securities market legal system.