China FX Derivatives Market Development Research

July 21^st, 2006 is a meaningful day for China FX history, because Reform ofExchange Rate Regime is announced that day. China initiated its new exchange rateregime, which is a controlled floating one, based on market supply and demand,whilst adjusted by a basket of currencies. It is a milestone to our FX derivativesmarket. It is becoming an urgent topic to study and explore the future development ofChinese FX derivatives market, based upon the state quo of China and couples ofyear's experiences of the global market.This paper, firstly, putts forward the conditions of global FX derivatives marketin an attempt to draw an outline of the market;secondly, analyzes useful developmentexperiences of three individual countries, viz. the United States, Mexico andSingapore, which represent three development models of FX derivative market inorder to grasp key points which will be helpful to China;thirdly, make an introductionto the FX derivatives of China;Finally, give some suggestions on FX derivativesmarket, which are relevant to China.