Research On The Development Of Stock Returns Swaps In China

After the global financial crisis, regulation of financial derivatives is a big trendto strengthen. Swaps and forwards, futures and options trading together constitute afundamental part of today’s financial engineering.Regard to the economicdevelopment of any country, whether it is government, business, or financialinstitutions that will face lower interest rate risk, exchange rate risk, expandingfinancing channels, reducing financing costs, adjusting the structure of assets andliabilities. As a derivative financial product, financial swaps can meet the needs ofgovernments, enterprises and financial institutions in these areas. Compared withswaps and futures, options have lower speculative and smaller risk. From a practicalway of financial reform, the promotion of this tool to encourage companies to hedgeswap market will improve the management level, provide banks with a new profitgrowth point, and help enhance the adaptability and competitiveness of the entirefinancial system which can active the financial markets. In the case of governmentregulation, the financial innovation of brokerage firms is in the ongoing process.Stock returns swaps as an innovative financial derivatives product, its theoreticalresearch and empirical research is necessary.This paper firstly introduces the basic theory concept of the stock returnsswaps, then describes the development of China’s stock returns swaps and problemsof this business, followed by studies of trends abroad of stock returns swaps similarfinancial products, and predict stock returns swaps business development. Finally itgives policy recommendations of how to promote Chinese stocks returns swapsdevelopment.The main frame of this paper has four parts. The first part describes the relatedtheory of stock returns swaps, including the definitions, characteristics, functions andrevenue metrics. The second part describes the current development and problems ofChina’s stock return swaps, which is divided into four small narratives, firstlyintroduction the development background of Chinese stock returns swap business,secondly the presentation of the current situation in China, thirdly introduction ofthe principles and patterns, finally elaborating China’s stock exchange business revenue problems. The third part describes the development trend of domestic andforeign similar products. This section firstly describes the relationship between stockreturn swaps and domestic and foreign interest rate swaps as well as global equityforwards and equity swaps. Then according to Interest rate swap business at home andabroad and the global rights forward and equity swaps data analysis, we suggest thedevelopment trend of China’s stock return swaps business. The fourth part gives somepolicy recommendations on promoting the development of China ’s stock returnswaps...