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Research On Legal Issues Of Special Treatment On Insolvency Risk In OTC Derivatives Transactions

Posted on:2016-07-08Degree:MasterType:Thesis
Country:ChinaCandidate:G N XiaFull Text:PDF
GTID:2296330470965722Subject:Economic Law
Abstract/Summary:PDF Full Text Request
On account of characteristics such as high-risk and massive trading volume of financial derivatives’ business, it is essential to prevent systematic risk that caused by high-risk and loss of both participants of one contract even though only one participant is in bankruptcy crisis. ISDA announced a series of standardized protocol such as close-out netting, a single agreement and the offset system, providing special right or priority to participant who is not in bankruptcy crisis. Throughout other countries in the world, law of bankruptcy distinguishes contract of financial derivatives from other non-derivatives financial contracts in most of countries. Meanwhile, those bankruptcies laws, endowing some special rights to participant without bankruptcy problem, protect the overall safety of financial market.With developing trends of economic globalization, the market of financial derivatives in our country is scaling up. Some new financial derivatives have played an important role in financial market. For one side, it is the need driven by fast development of financial derivatives brings the studies and discussions about the special protection of financial derivatives promoted by men of law. For the other, the current situation of developing market of Chinese financial derivatives also restricts the further study for the protection of financial derivatives in the field of Bankruptcy Law. When derivatives appear in the field of Bankruptcy Law, a series of conflicts of laws have come out, such as the conflicts between netting, and bankrupt recession and right of set-off for bankruptcy, and the conflicts between options of bankruptcy administrator and confliction of effective balance of terms underwrite in bankruptcy agreement. Furthermore, China is looking for to clam special protection of financial derivatives by editing Law of Corporate Bankruptcy, which protect the safety of financial market consequently.In chapter one, from the riskines of off-site transactions of financial derivatives, the relevantly theoretical problems of financial derivatives would be introduced that highlight bankruptcy risk of financial derivatives transactions and analyze the solution of the bankruptcy risk problem in detail. By introducing net settlement system and credit risk system, chapter one also gives a foreshadowing to the introduction of ISDA main agreements in chapter two.In chapter two, penetrating from the institutional arrangement of ISDA main agreements, this section, through special protection of off-site finance derivatives transaction offered by arrangement of contracts, practically discusses questions on ISDA main agreements regarding termination of net settlement, offset system, and other conflictions on bankruptcy laws. This chapter also introduces how ISDA provides special protection to anti-bankruptcy participants of off-site finance derivative transactions, through single agreement, termination of net settlement and offset system.Chapter three introduces systematic researches of off-site financial derivatives transactions conducted by U.S bankruptcy laws. Those researches provide good examples to China by discussing researches such as safety port of financial derivatives transactions regarding remission of automatic frozen system, and summarizing existing U.S systems.Chapter four, on the basis of analysis of previous contends and reference of foreign systems, analyzes developing problem of currently domestic off-site financial derivatives transactions. Furthermore, this chapter summarizes certain principles of bankruptcy laws regarding financial derivatives of China, discusses how to consummate bankruptcy laws regarding off-site financial derivatives transactions, and proposes certain suggestions that apply to regulations and laws of China.
Keywords/Search Tags:Bankruptcy law, Off-site trade of financial derivatives, Close-out netting, offset system
PDF Full Text Request
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