Research On China's Financial Derivatives Innovation Policy Under The Background Of Shanghai And Shenzhen-Hong Kong Stock Connect

On November 17,2014,the shanghai-hong kong stock connect was officially opened,and on December 5,2016,the shenzhen-hong kong stock connect was officially opened.The opening of Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect program has reduced the information asymmetry between the two markets in mainland and Hong Kong,improved the sharing of information,lead to a more consistent price market.It also reduced the barriers to capital flows in both places.A channel was opened for the two-way flow of funds between the two cities of land and port.Under the interconnection and interoperability mechanism,Hong Kong investors have brought a large amount of capital inflow to the domestic capital market through the the north trade of Shanghai Stock Exchange.At the same time,the policy also encourages the retail investors and institutional investors to buy related stocks and purchase related derivatives at the same time.There are certain differences between the mainland and Hong Kong.For example,in the derivatives market,the development of financial derivatives in Hong Kong has a long history and various varieties,which is irreplaceable in comparison with the mainland.The capital market in China is still not fully open.In addition to commodity derivatives,there are few varieties of financial derivatives listed on the market.Many products need to be carried out through special trading places outside the stock exchange,and cross platform trading adds to the difficulty of arbitrage for investors.In the background of Shanghai and shenzhen stock connect,Hong Kong investors also bought the warrants of the underlying stocks,the bear witness,the stock option futures and other financial derivative products while buying the mainland shares.Investors can not only hedge the stock price differences and the volatility risk,but also obtain arbitrage opportunities.While buying Hong Kong shares,mainland investors lack derivatives that can hedge their risk.Again,there are many differences in the trading system between Hong Kong and shenzhen,which also increase the difference in investment between the two cities.This paper collects the historical data of the Wind database,various financial exchanges and the Hong Kong derivatives market.From the perspective of trading system,capital flow situation,the price behavior of A+H listed company in the secondary market,and the difference of financial derivatives of the two places,the paper mainly analyzes the price change,AH premium effect and the existence of financial derivative products of the underlying securities in the month before and after the opening of the shanghai-hong kong stock exchange in November,2014,and whether it reduces the fluctuation of the stock market in Hong Kong.There are a great variety of individual stocks and derivatives in the market.This paper selects the historical data of Ping An of China and it's derivatives and hang seng index options or futures,and briefly calculates its historical volatility.Through the empirical study,the opening of Shanghai,Hong Kong and Shenzhen Hong Kong has enhanced the connectivity between the two markets,and the financial industry and the manufacturing industry have received considerable attention.The risk control of the bull bear Certificate in the associated derivatives of the underlying stock.The swap ratio of warrants provides the option of leverage for investors.These two types of products can be given priority in the innovation process of continental derivatives.From the perspective of risk and return,stock options and individual stock futures can both hedge risks and bring multiple gains or losses.Index futures,though not effectively reduce the volatility of stock index,provides a new option for investors' portfolio arbitrage.Under the background of interconnection,the investors' structure of "retail investors" in the mainland has made it necessary for financial institutions to learn from Hongkong's financial market experience and innovate financial derivatives.Government departments should strengthen and improve financial market regulation and investor education,stimulate the transformation of China's financial institutions,diversify financial products and improve industry competition mode,so as to promote the overall innovation and development of China's capital market.