Study Of The Legal Regulation Of Financial Derivatives In China

The outbreak of secondary mortgage loan crisis in USA in 2007, has affected the whole world financial market tremendously. Many housings mortgage loan organizations, world-known commercial banks, investment banks and hedge funds were caught in this grave financial crisis. The SociétéGénérale announced in January, 2008. it got a huge sum of nearly 5 billion Euro losses due to some personnel's breaking of relevant rules and regulations, only by the method of expedited execution of 5.5 billion Euro complement minimum capital requirement did it avoid bankruptcy like Bahrain Bank. These world-shocked events have drawn attention on the regulation of financial derivative instruments once again.Financial derivative instruments came into being in 70's last century. Chicago Mercantile Exchange took the lead in having foreign exchange futures; this could be the first case for financial derivative instruments to come into being as the financial tools we know today. Since then, financial derivative instruments have benefited people a lot around the world, yet, financial derivative instruments do have side-effects, they are normally associated with huge risks and can deal a blow on the whole financial system, however, the risks realized can not be blamed on financial derivative instruments only, it is because of lack and incompetence of the legal regulations. Financial derivative instruments in China are not so developed as in USA, yet our country needs to develop financial derivative instruments as a necessary part of the whole financial market. We had failures, but the failures can never stop us from developing financial derivative instruments. Hence we need to better our legal regulations on financial derivative instruments.The thesis is the study on legal regulations of financial derivative instruments, the starting point would be what are financial derivative instruments, then the legal characters and the legal regulation framework of financial derivative will be analyzed, the problems associated with China's legal regulations of financial derivative instruments will be listed and analyzed, at last, relevant suggestions on legal regulations will be provided.The thesis includes four chapters:The first chapter discusses what are financial derivative instruments? The necessities for developing financial derivative instruments would be understood, the legal characteristics of financial derivative instruments will be analyzed, at last the developments of financial derivative instruments home and abroad will also be briefed.The second chapter discusses the legal meaning of financial derivative instruments. The comparison between financial derivative instruments and underlying financial instruments will be made. Based on the concept of contract, the legal characteristics of financial derivative instruments will be analyzed.The third chapter discusses the legal framework of financial derivative instruments. The necessities of legal regulation on financial derivative instruments, by employing the theory of economic law, the legal regulation of financial derivative instruments will be elaborated.The fourth chapter aims to better our country's legal regulations on financial derivative instruments, corresponding to the problems analyzed in the fifth chapter, relevant legal suggestions will be provided in this chapter.