Improvement On Supervision Legal System Under The Innovation Of Finnacial Derivatives

The financial derivative is a financial agreement that arranges the rights and obligations of the prospective asset. It plays an important role in the concept of avoiding the market risks and decreasing the financing costs. With the globalization of the economy, the global economy develops rapidly. The functions of the financial derivative become more and more obvious. Meanwhile, this product has large potential risk. Throughout each financial crisis, they all have significant correlation with the financial derivatives. Besides, the product advances with the time and innovates constantly, and varied financial derivatives are emerging in an endless stream and develops in great leaps, which leads to the supervision problems about the varied financial derivatives emerging. How to perfect the supervision laws and regulations becomes the issue that all countries competitively research. Since the outburst of the finance crisis in2008, the issue has been a worldwide problem. To fight it is a matter of great urgency.Seeing from the perspective of historic development, the financial derivatives have developed to be numerous from the beginning when there were only exist simple forward contracts. Because originally the financial derivatives were not complex and gave priority to simple contracts, besides, the transactions are not so busy as today and the leveraged feature is as obvious as today neither, this product has small influence on the whole economy. Hence, the regulation of derivatives mainly comes from the self-discipline, the religion and the professional associations are the main monitor, however the government doesn’t play an important role in attending the supervision. For the demand of the economy, the financial derivatives have developed continually and the relevant businesses proceed more and more frequently, which has led to the outburst of its potential risk. All countries have reinforced the supervision. As time goes by, the supervision changes to be loose slowly and the regulation legal system gets improvement further. Since the financial crisis occurs in2008, it sets off an alarm bear for supervising the derivatives. They publish series of bills to control this product, represented by America. Up to today, each advanced country contributes to the innovation on the derivatives via the advanced computer technology. When facing to the innovation, these countries such as America, South Korea, Japan and Singapore adopt different supervision legal system and get different results separately. Chinese economy has achieved rapid development since the reform and opening-up policy. Our nation starts to test the foreign currency futures and bond futures, which brings valuable experiences despite the result is not satisfying. We have to reflect on Chinese supervision legal system of financial derivatives, analyze the history and status of Chinese "industry regulation" deeply, seek the root of the "industry regulation" problems, and investigate the functional regulation to find the way that is suitable for China. At last, through using the overseas relevant successful experiences for reference and contacting with our current situation, this thesis recommends constructing the suitable supervision framework for our nation’s financial derivatives and improving our country’s relevant rules based on the regulator target and principle. We should open up to the world and move towards to international cooperation.