Research On Basic Legal System Of Derivatives Of Sea Freight

The development of financial derivatives has reached a new height since the1980s, combined with the collapse of Bretton Woods system and the cancel of foreign exchange control by developed countries. In recent thirty years, the tide of financial liberalization brought worldwide prosperity. Countries and regions like London, New York, Hong Kong(China), Singapore and others got rapid development via the port’s geographical advantages. As the time flies, they all become the world’s most important financial and shipping centers that can not be ingnored. Governments have constantly enacted various laws and policy to encourage financial development and financial innovation. Shipping finance in this environment gradually envelop from single way to multiple measures.China, as a shipping and financial power, shipping financial derivatives can help to avoid the risk of shipping enterprise, avoid thelosses by frequent fluctuation of freight price and exchange rate, thus conducive to the long-term development of enterprises.However, the rapid rise of financial derivativesare closely related to the frequent fluctuation of interest rate,to the price of currencies, stock, bond and commodity which are always in constant change. Especially in financial derivatives and a famous metaphor:"financial weapons of mass destruction of toxic".In2003, Warren Buffett had pointed out that "In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." To be safe, effective and timely supervision is necessary. This paper will explore the roadof basic law of freight derivatives.This paper consists of five chapters, the first chapter is a summary of financial derivatives, and the main content is to discuss the legal connotation and legal attribute of the financial derivatives. And then explain the legal characteristics of financial derivatives from the basic contract system perspective. Finally introduces the evolution of the basic law of China’s financial derivatives from three aspects:the first stage-the preliminary stage of development, the second stage-stop and rectification, and the third stage-the new development.The second chapter first takes a looke into the BDI index-international shipping freight index derivatives-as the breakthrough point, on this basis of that, discusses and defines the legal attribute, trading history of forward freight agreements (FFA). Then draws out China’s shipping freight index system, including the most outstanding achievements:the establishment, the legal norms and the freight index system of the Shanghai shipping exchange (SSE); and freight index system of other shipping exchanges in China, thus build a framework of shipping freight index system. Then introduce the third party trading platform in China shipping freight index, including the transaction history, transactions function, trading rules system and transaction standard contract etc.The third chapter discusses the legal connotation and its cause of legal risks and legal uncertainty, and has chosen a prominent example. In derivatives trading, legal risk usually refers to:the uncertainty of law, the unprotected transaction process by law, and what’s worse, the opponent doesn’t have engaged in derivative transactions qualifications, which all lead to the contract to be invalid or unenforceable and lead to the possibility of trader’s loss. Later in this chapter highlights the COSCO FFA transactions huge loss case, reveals numerous problems of the central enterprises trading in ocean freight derivatives, put forward the necessity of the regulation of our country’s shipping freight derivatives.The fourth chapter focuses on one of the core contents of the text-the financial supervision, analyzes current chaotic situation of financial supervision of the legal system, part of the reason is because the current mixed operation and separate supervision in the financial supervision legal system is not perfect, puts forward the opinion how to establish basic legal framework in the situation that the system of shipping freight index in our country has just set up, especially only one law-Administrative Regulations on Futures Trading "-can be used. This chapter starts from five aspects, including the legal basis, objects of supervision, government supervision, self-discipline supervision and international supervision cooperation, trying to straighten out financial regulatory ideas, so as to better adapt to the financial globalization and financial liberalization tide of the century. The first part expounds the legal supervision on the basis of shipping freight derivatives, from the following aspects:vacancy of legal basis of freight derivatives trading, problems of application of laws in China freight derivatives trade, OTC supervision and exchange supervision, government supervision, self-discipline, international supervision cooperation. The international regulatory cooperation freight derivatives is explained from the aspects of regulation ofinternational association of and intergovernmental coordination cooperation.Finally focuses on the problems in the protection of freight derivatives trades financial consumer rights. In our country, financial consumers can be understood as "the depositors and other clients","the parties to insurance activities","investors" and other natural persons. This chapter analyses the present situation of the imbalance of China’s financial consumer rights and interests, pointing out that the financial consumers our country should clear the rights, obligations and the category, perfect its rights protection and appearl means, respectively describes from three aspects,namely the administrative, civil and criminal aspects, expounds the problem of the protection of consumer freight derivatives trade.This chapter expounds from three aspects, the first section is the imbalance of financial consumer rights and obligations in China freight freight derivatives trade, pointing out that China’s financial consumer law protection system is not perfect, financial consumer rights in freight derivatives trade; the second section is about administrative protection of consumers rights in freight derivatives trade, discusses the the financial derivatives consumers rights administrative protection, administrative supervision, administrative penalty and administrative responsibility; the third section is about the civil protection of consumers rights in freight derivatives trade, expounds on the the legal problems of protection of consumers by special agreement, by limiting the transaction subject, through the contract laws and regulations, by bankruptcy laws and regulations; the fourth section is about the criminal protection of consumers rights in freight derivatives trade, mainly discusses the following two problems:constraints on the behavior of insider trading, the legal restriction on market manipulation laws.The financial crisis left all kinds of legal problems of freight derivatives transactions in front of people in the world, when you look into our country’s situation, it is true that "the road ahead will be long". It is not a short time to make every one involved in the shipping freight derivatives is able to realize the legal responsibility, but also needs to perfect the entire social education, and constantly improve the master consciousness of all financial regulators, financial institutions, industry practitioners, and market participants and other financial activities.