Research On Legal Issues Of Financial Derivative Products Market

The noticeable upsurge of global financial derivative products (FDPs) trading at the turn of the 21st century has made a significant impact on the development of the global economy and finance. However, the recent subprime mortgage crisis that originated in the US, only second to its 1929 economic crisis, has plunged the world financial system into great turmoil. The reasons are hard to nail down in a few words. Nevertheless, the FDPs have become the main topic, though they can hardly be called the direct cause of the crisis. What are the features and risks of the FDPs? How to make regulations for the FDPs trading market? They remain an important subject in the study of the creative legal system of the FDPs. But the study is inadequate due to the profound professional financial knowledge of pricing theory and risk model and lack of the practical experience in the FDPs market. This paper is to attempt to study some practical legal problems in the FDPs market so as to offer some thoughts on how to make regulations of the FDPs market.The paper is divided into four parts, and the outlines are as follows:ChapterⅠis the general principles of legal supervision of financial derivatives, which is the theoretical basis for this article. Firstly, this part defines the features of FDPs and generalizes six kinds of potential risk of FDPs. It also analyzes the necessity and the framework contents of the legal system of FDPs market and analyzes guiding principles for market regulation.ChapterⅡmakes a study of the development process of China's financial derivatives market and deliberates about its failture. Then it depicts the present regulatory and legislative status of coordination mechanisms in the FDPs market and its problems.ChapterⅢis the legal analysis of supervision system of financial derivatives in Major developed countries and international organizations. Start with the regulatory regime classification starting, the paper introduces Ato represent the United States and Hong Kong authorities to monitor type system; to the United Kingdom and Japan, represented by a single function of regulatory-type system.At the same time, the characteristics of their systems are analyzed and evaluated. At the international organizations levels, first of all, the systems of the Basel Committee about the supervision of financial derivatives are introduced, and the development and lack of "Basel Agreement" on the supervision of financial derivatives transactions are analized. This paper also introduces the IOSCO's supervision coordination for increasing the risk management efficiency and related proposal to disclose the information of financial derivatives effectively.Chapter IV is the improvement of China's financial derivatives law. The first part is learning from the lessons that the U.S.sub-loan crisis has given us in legal supervision of financial derivatives, based on our actual financial supervision. Then based on our actual financial supervision of China's financial derivatives market to optimize the possibility of legal and regulatory system means that a unified regulatory model and its reasonable and best choice. Finally, it offers some suggestions on reestablishing FDPs market regulatory system by improving financial regulation, establishing coordinated regulatory modes, improving the supporting regulatory rules, norming derived from the internal control mechanisms, and financial institutions to strengthen international cooperation in reconstruction of several aspects of China's financial derivatives market regulation humble opinion the rule of law.