Research On Legislation Of Credit Default Swaps In China

Credit default swap,referred to as CDS,is a widely used credit derivative products,which originated in the United States.Credit default swap is an important financial innovation products,which provides a new way for financial institutions to transfer and spread credit risk.Credit default swap is widely used in the international credit derivatives market because it enables market participants to effectively avoid credit risk.With the rapid development of economy,China also opened the credit derivatives trading market.Since then,credit default swaps have started to develop in China.But because of the lack of supervision of credit default swaps,the global financial crisis broke out in 2008.Therefore,making further study of the legal construction of credit default swaps has important theoretical and practical significance.This paper has six parts.The first part is introduction.This part explores the background and meaning of the regulatory legislation of credit default swaps.And also the present research status at home and abroad are introduced.The second part is an overview of credit default swaps.We explore its operating mechanism and its impact on the financial market and discuss its market risk and the necessity to strengthen its supervision.The third part is the present situation of China's credit default swap.This part is composed of four aspects:the regulatory system,market access rules,the regulatory rules of the transaction and the market exit system.In the regulatory system,China adopted the "one line and three" mixed supervision,and the People's Bank of China and the CBRC-based,dealers Association to supplement the credit derivatives market management.In terms of market access rules,in order to regulate the operation of the transaction,China provides a more strict transaction access conditions,the main types of transactions and qualifications are regulated to prevent unfair trading parties to enter the market.In the case of regulatory rules in transactions,the application of information disclosure,settlement,guarantee and default disposal rules in credit derivative business is described in detail.Finally,in the market exit system,we discuss the institutional exit and the market exit of the two ways,and withdraw a different degree of legal regulation for different ways.Although the time of China's participation in credit default swap business is not long,we have encountered a lot of difficulties and challenges in practice.The fourth part is the drawback of legislation in China's credit default swap.After the above description of the status quo of China's legislation,we sum up the shortcomings in practice,which mainly exist in the following aspects.Firstly,the relevant provisions scattered in non-legislative documents.They do not have legal coercive force;Secondly,the business scope is too narrow to develop credit derivatives business;Thirdly,some legal provisions and international practices do not match,which will lead to controversy in international affairs.Because China's credit derivatives business has many deficiencies,we need to learn from the experience of foreign developed countries in order to make our legislative system more perfect.The fifth part is the Anglo-American credit default swap regulation legislation and its reference.In this part,we explore the British and American countries to participate in the development of credit derivatives business process.After analyzing the relevant legislative experience in the UK and the United States,the paper summarizes the rules that can be borrowed from China.Firstly we should adopt the regulatory model which is adapted to China's national conditions.Secondly,we should maintain the balance between market access and the appropriate principle.Thirdly,we should formulate suitable regulations for China's development.Fourthly,we should implement the "special treatment" in bankruptcy law.The sixth part is the perfection of the legislation of credit default swap in China.In view of many deficiencies in the current transaction,we should use appropriate means to improve.Firstly,in the improvement of the regulatory system,we should adopt institutional and functional supervision co-exist to promote the exchange between the regulatory authorities and collaboration.Secondly,in terms of improving the market access rules,we should expand the scope of business of credit derivatives transactions and express the provisions in the legislation.We should also limit the rights of traders and clear their appropriate obligations in the legislation.Thirdly,in the improvement of the regulatory rules in the transaction,we should introduce the central counterparty settlement mechanism and determine the international rules can apply in our country.Finally,in terms of improving the market exit rules,we must endorse the effectiveness of the termination of netting rules in our laws.