The Research On The Legal Problem Of Risk Prevention In Financial Derivatives Transaction

With the wave of financial innovation, financial derivatives transaction originates in the1970s. Its functions are not only to transfer risks and to reduce costs, but also to achieve a rational resource allocation. Undoubtedly, in the development of capital market, making good use of the financial innovative instrument will be of great benefit to the improvement of international competitiveness. Moreover, as the globalization and liberalization of finance develop rapidly, especially facing American financial crisis, it is obviously of theoretical and practical significance to study financial derivatives and its risk prevention.Currently, our financial derivatives market is still in its beginning stage. Financial institutions, such as bank, and other enterprises are just beginning to or have not yet come to participate in this game. In order to establish a legal supervision system in accordance with our national situation, we should not only base on domestic realities, but also learn from international experiences. Take America, England and Basel Committee on Banking Supervision for example. These countries and international organization have common in the regulation of financial derivatives, which is attaching great importance to the supervision of exchange and guild. But they also have many differences. For example, external supervision is mainly implemented by the Commodity Futures Trading Commission and Securities and Exchange Commission in America. What’s more, the American institutions participating in financial derivatives transaction have to accept the supervision of Federal Reserve Bank etcetera. However, in England, it mainly adopts a means of united supervision and is conducted by the Financial Services Authority that is unofficial. Nowadays, the means of united supervision has considerable support around the world. This is because it can improve the efficiency and cut the cost of supervision simultaneously.Based on the theoretical and practical analysis of financial derivatives transaction’s risks, and the understanding of domestic and overseas legislation, hope to advance some reasonable proposals for the improvement of our financial risk prevention system. Firstly, we should improve the legislature level. Speed the formation of Chinese Financial Derivatives Act and establish a supporting legal system. Secondly, clearly define the position of supervision subject and go with the tide of united supervision. In addition, we can increase supervision authority of the exchange. Thirdly, integrate external supervision with internal control, and pay more attention to the construction of internal institutional risk prevention system. Fourthly, we should set up an idea of overall risk supervision and carry out qualification standards in the financial derivatives market, including the market access, the margin system, the price limit, and information disclosure system and so on. Lastly but not the less, under the environment of financial globalization, we should strengthen international coordination and cooperation.