| As China’s economy sustainably develops, foreign exchange (Forex) funds constantly grow, and growing demand for Forex investment in international market is increased. Therefore, some Chinese investors have shown increasing concern for leveraged Forex investment, which is currently a major trading variety in international foreign exhange market and the trading volume of which accounts for one-third of US$5300 billion, the daily average trading volume in international Forex market. In China, leveraged Forex investment was twice applied in fianancial market, and the application was stopped in home commercial banks by the influence of market risk control and international financial crisis and out of the prudence of Chinese financial supervision administrations. Market demand for leveraged Forex investment, however, has not slackened off, and instead, it is growingly on the increase.By demand for Forex investment in China, many foreign investment banks and money brokers’ leveraged Forex investments are attracted one after another by some Chinese investors. At present, some home investors have accepted foreign financial institutions’ offers and engaged in leveraged Forex trading with a heavy volume. At the same time, home financial institutions not only miss the opportunity to make profits but also lose such an important fianncial market because they cannot provide such investment service. Besides, home financial insitutions are restrained in the competition of international financial product and its service, which has an impact on China’s seizing the initiative in strategy in international financial market. Such restraint causes a vacuum of financial supervision, which, as a result, leads not only to improper outflow of Forex but also to indirect drain of state tax revenues.The major realistic issue that Chinese financial supervision administrations have to face is the way in which leveraged Forex investment from many foreign financial institutions is supervised by law on the one hand, and home financial institutions are assisted in handling such investment positively and safely and home investors’ investments properly guided and standardized in international Forex market on the other. By doing so the configurative results and operative returns of China’s substantial Forex resources are increased.On the basis of the relevant theory of leveraged Forex investment, this thesis deals with leveraged Forex investment and its development trend. Research shows that leveraged Forex investment in China is an inavoidable product to a certain stage external economy develops, apart from market demand. Under the circumstances of global economic integration and Chinese financial market further opening up, China needs to follow the development trend of international financial malrket, positively seeks and opens up to leveraged Forex investment, further establish and improve financial supervision system, and guard against foreign financial institutions’ nibbling away at and monopolizing such product market. The purpose of which is to help Chinese investors to identify and eliminate financial risk and ensure their financial security, and as well to direct Chinese financial institutions to seize the initiative in international Forex market—such a top service business.In combination with Chinese leveraged Forex investment management and practice, this paper analyzes not only the experience and lessons and the existing problems in Chinese financial market but also the major limiting factors in leveraged Forex investment in China. In the meantime, the paper presents the major questions that Chinese financial supervsion sysytem has to deal with. Besides, on the basis of investigating foreign countries’ supervision system and experience, the paper insists that the supervision system and experince of international leveraged Forex investment and feasible solutions be borrowed.The thesis is intended to offer theoretical framework for the state financial supervision administrations to establish and improve supervision system for leveraged Forex investment in order that it could be healthily developing in China.China should set up unified financial supervision system for leveraged Forex investment, give priority to establishing and improving Regulations for Derived Product Trading in Forex Market, build up strict market access threshold, properly limit the magnifying power of leverage, establish standard, transparent, and instant information release system and multi-layer security system for investors and positively inspire domestic and international financial institutions’ joint venture and cooperation in levergaed Forex investment. |
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