On The Multilateral Governance Mechanism Of The Transaction Of International Financial Derivatives

As the most important financial innovation since 70s of last century, financial derivatives play an increasingly important role in risk management of the financial market, and thus optimize the allocation of resources and promote the efficiency of the market. However, the financial derivatives also aggravate the possibility of the financial market risks while helping investors to avoid risks and optimizing the allocation of resources. That the financial derivatives would aggravate the financial risk is determined by its own trading characteristics. The trait of high leverage and high relevance of financial derivatives transaction permit many speculators to make by only a small amount of funds great risks and have the risks spread and expanded rapidly. The nature of trans-regional and cross-border of international financial derivatives trading make the risk prevention and governance more complicated and difficult. In recent years, the frequent occurrence of the financial turmoil demonstrates that the existing international financial regulatory system can not effectively guard against and deal with more and more global financial risks arising from the failure of international financial derivatives trading. Only all the countries further strengthen coordination and cooperation in supervision, establish the international multilateral mechanism consisting of bilateral governance, regional multilateral governance and global multilateral governance, and further strengthen and improve the technical requirements of the international financial derivatives trading from the aspects of capital adequacy ratio, deposit ratio, information disclosure and resources enjoyment, risk early warning and emergency relief so on, can heavy financial risks arising from the failure of international financial derivatives transaction be effectively prevented. But to reform the existing international financial regulatory system and set up unified international multilateral governance mechanism is faced with many theoretical and practical difficulties. However, the international multilateral governance mechanism will be established eventually in global scope with the convergence of economic development level among all the countries, the promotion of economic globalization and the innovation of institutional mechanism in all the countries.