Using Derivatives To Guard Against Financial Risk For China's Financial Markets

We are confronted with more dangerous financial risks than ever withthe establishment of market economy and the deepening of reform and theopening to the outside world. The management of financial risks has beenthe focal point of government's work in recent years.Financial risks management is a complicated project because of itscomprehensive concept and the complex structure. After China joins WTO,fierce competition is inevitable in our financial circles. This requiresfinancial innovation and the reinforcement of financial risks management inour firms and banks. As soon as our interest ratio is free step by step, moreand more derivatives are needed to guard against financial risks throughhedging. So the exploration on the management of financial risks throughderivative products has a monentous and practical significance.From the viewpoint of managing financial risks by derivatives, thisarticle gives a consideration and analysis on the way of developing ourfinancial derivative market and in financial risks management byderivatives.This article explores the techniques of hedging which are used tomanage interest ratio risks, stork market risks. Especially this articleanalyzes the development condition of Stock Index Futures in China andmakes a tentative design of them. Finally this article puts forward someproposals of the development of our financial derivative market.