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China's Financial Derivatives Market Development

Posted on:2005-10-08Degree:MasterType:Thesis
Country:ChinaCandidate:B H WuFull Text:PDF
GTID:2206360122993872Subject:World economy
Abstract/Summary:PDF Full Text Request
China has entered WTO and has become a formal member. As China speed up its capital market reform and open up, China's economy and finance will join the world market. The internationalization and freedom of finance make world's financial capital face great risks. The fluctuation of interest rates and free floating of exchange has already raised potential risks for a country's financial capital. To avoid these risks and to gain from these risks, countries should develop their own financial derivatives markets. Currently, not only the developed western countries are improving their own financial derivatives markets, but the developing countries and areas are also developing their own financial derivatives markets too. In such an international background, it is a meaningful topic whether China should develop its own financial derivatives market.It is based on this background that this article starts to discuss the feasibilities and necessities of China's developing its own financial derivatives market. The paper includes five chapters, and they discussed the following details:Chapter one introduced the basic concepts of financial derivatives. First , the chapter introduced the functions and features of financial derivatives, besides introducing the contents and functions of the financial derivatives, it mainly discussed the features of financial derivatives. Second, it categorized the financial derivatives with different standards. In the end of the chapter it explained the history conditions that caused the birth of financial derivatives.Chapter two gives a brief presentation of development of the world's main financial derivatives markets. Financial derivatives markets in western countries came into being long ago and their development is in accordance with their economic development trends. Their markets also experienced a period of development, quite slowly at first, but much mature now. Developing countries develop their financial derivatives markets with a later development advantage, that is, they started later, but developed faster. Financial derivatives markets are very important in maintaining the stability of economy and finance of a country. The development of financial derivatives markets in South East Asia countries after the financial crisis proves its function in maintaining the stability and order of financial markets. It is helpful to look into these developing countries experience in this area for China to build up the financial derivatives market.Chapter three is one of the most important chapters of the paper, it checks the feasibilities for China to develop financial derivatives market. As China's market economy has been developed for quite a long time, the conditions for developing commodities derivatives have been mature. But the conditions for developing the financial derivatives have not been mature yet although in certain fields it has already been ready: the active bonds and stocks trade has offered the basic conditions for the development of bonds and stocks index and stocks derivatives, China is now capable of start bonds and stocks index options. But as China has just begun its interest rates marketing process, it is still too early to start short period interest rates derivatives. Also, as China is a foreign exchange regulating country and the foreign exchange rates have not be marketlized, it is not feasible to start RMB exchange derivatives. As China's financial market is not mature, the types of financial derivatives are restricted.Chapter four discusses the necessities of developing financial derivatives in China. It is certain that China will develop financial derivatives market as China's economy and finance develop. By developing financial derivatives market, it can maintain the security and stability of China's finance system, protect against financial crisis, and improve the international competitiveness.Chapter five presents the strategies and measures for the development of China's financial derivatives market. Financial derivatives must be produced gradually and sh...
Keywords/Search Tags:Financial derivatives, Commodities derivatives, Marketlize interest rates, Marketlize exchange rates, Forward, Contract, Futures, Options, Swap
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