On The Stock Options Market Regulatory Mechanisms

Stock Option which sprouted in the 17 th century is the earliest of options products. Although compared to other financial derivatives to generate late, it is one of the most vigorous vitality and fastest growing derivative products. In accordance with the exercise period of the option, it is divided into American options and European options. Stock options have functions of risk management, profitability, price discovery and promoting the development of financial markets. The stock options trading needs through several steps such as accounting, issuing instruction, brokered transactions and settling transactions. In order to ensure the safety of the stock options market, it needs to carry out the necessary supervision, which gains the support of the theory of economics and law. Contrasting stock legislation and regulation mode of United States, Germany, Japan, China Taiwan, China and Hong Kong, useful experience can be gotten. On February 19, 2015, the country’s first stock option certificates 50 ETF options traded on the Shanghai Stock Exchange, which meant that China’s securities market had formally entered the era Option. However, this new thing, because of its own Leverage, immature market and other factors, makes the stock options market face a triple risk resulting from environment, transactions and regulatory. Our response to these risks is positive legislation. Although there is no law specifically for stock options, the China Securities Regulatory Commission and the Stock Exchange have issued the relevant measures and guidelines to regulate the immature market. At present, the stock options market is a three-level regulatory approach, which has many defects such as scattered legislation, much blank; provision of principle, low potency levels; many restrictions, the lack of forward-looking. For the supervision legislative purpose of maintaining market order, protecting the legitimate rights and interests of investors, promoting the development of the stock options market and avoiding systemic risk, under the guidance of the principles of fairness and efficiency, moderate supervision, protecting the interests of investors, supervision according to law, learn from the experiences of countries extraterritorial legislation; focus on improving the legal system; focus on a clear division of regulatory agencies; focus on co-ordination of regulatory agencies in order to improve our stock options regulatory legislation. The author puts forward three proposals: firstly, introduce "Futures Act" and improve the supporting laws and regulations as soon as possible; and secondly, improve the "three regulatory model"; and thirdly, improve the risk control system.