Research On Legal Supervision Of Credit Default Swaps In China

Credit default swap is one of the main forms of credit derivatives.Its most important function is to transfer and rationally allocate credit risk.It is an efficient risk management tool and plays a great role in credit risk control.Following the outbreak of large-scale defaults in the bond market in 2018,credit risk is still the main situation in the bond market in 2019.Market participants' demand for innovative credit risk management tools continues to increase.However,due to the lack of effective risk management control in credit default swap transactions,it faces the risk of counterparty default and systemic risk.Therefore,we should combine the actual development of domestic credit derivatives market,learn from the experience and lessons of foreign credit default swap market development,ensure the balance between financial stability and financial innovation,in order to constantly improve the regulatory system to stabilize the market order and realize the risk management function of credit default swap.This article is divided into four parts,first of all,the basic overview of the legal supervision of credit default swaps.This paper defines credit default swaps from the perspective of concepts and legal attributes,expounds the theoretical basis of supervision such as financial vulnerability theory,information asymmetry theory and government regulation economic theory,and explains the practical necessity of strengthening the legal supervision of credit default swaps in view of the risks often occurring in the course of transactions.Secondly,it clarifies the current situation and problems of legal supervision of credit default swaps in China.Credit default swaps are still in the early stages of development,and the regulatory rules of TRADERS'associations are still imperfect,and transactions are also "indirectly" regulated by the People's Bank of China and the Banking and Insurance Regulatory Commission.At present,the main problems existing in the legal supervision of credit default swaps lie in the unclear government regulatory bodies,the imperfect market access conditions,the lack of uniform application of centralized liquidation and the low level of transaction data disclosure.Thirdly,it introduces the regulatory reform and relevant regulatory measures of the United States,the European Union and international organizations on OTC derivatives such as credit default swaps,in order to provide guidance for improving the legalsupervision of credit default swaps in China.Finally,it puts forward some suggestions to improve the legal supervision of credit default swaps in China.Firstly,it is necessary to clarify the government regulators,which are suitable to take the SFC as the supervisory department according to the product function orientation.At the same time,because the transactions are conducted in the inter-bank bond market,the participants in the transactions mostly involve banks and other financial institutions,and the insurance companies may be introduced in the future,it is necessary to strengthen the coordination of various supervisory departments;secondly,the current market access conditions are not yet healthy.Fully,the buyer should be required to protect the credit against the reference debt to prevent market speculation from overflowing and ensure the eligibility of the participants in the transaction.Thirdly,since the counterparty risk is the primary threat to the transaction,we should accelerate the centralized liquidation of credit default swaps,improve the text of credit default swaps contracts,promote contract standardization,and strengthen the risk supervision of centralized liquidation institutions.Fourthly,we should strengthen the system construction and content improvement of the regulatory rules on information disclosure,ensure effective access to market transaction data and improve market transparency.