An Analysis Of Related Party Transactions Regulations On Financial Holding Company In China

There is a growing trend in the global financial industry to change from segregation of financial business to mixed operation.Financial holding company,a typical mixed operation model,takes advantages in lowering transaction costs,developing innovative financial product and service as well as providing intra-group support by trans-market business operations.As one of the most important types of innovations in financial industry,it has become the major organizational form and will play an increasing crucial role in the future trend.However,compared to single financial institution,financial holding company in form of mixed operation model is more complicated in organizations which requires higher risk management standard.In China,financial holding company is emerged in the trend of mixed operation while under its financial system of segregation of business.There is no legal definition of financial holding company as well as lacking of relevant regulations which increases the risk especially caused by those in savage growth.Financial holding company in itself constructs complicated relationships of capital and business in aim of achieving synergistic effects through related party transactions.However,it may also be the cause of a series of risks.As a matter of fact,the potential risks of conflicts of interest,regulatory arbitrage,systemic risk and so on caused by financial holding company is tied closely with related party transactions.Therefore,it's of utmost importance to regulate related party transactions in order to reduce the risks of financial holding company.UK's reform of financial regulation conforms to the trend of financial development which promotes sound mixed operation practices with a perfect regulatory system.With the aim of improving its own related party transactions regulations of financial holding company in China,it will learn a lot by taking UK's experience for reference.This paper begins with problem analyzing of related party transactions regulations of financial holding company in China.Then summarizing key points of UK's experience seeking to develop and improve regulations in the Chinese context for achieving the objectives of sustainable development of financial holding company.This paper contains four chapters.Chapter one is about theoretical analysis of related party transactions regulations of financial holding company.At first,it discusses about the definition of financial holding company among different countries.Then through cases study of CITIC Group,it puts forward that it is of vital importance to regulate on related party transactions of financial holding company for it can be the risk factors.In spite of that,related party transactions play an important role in developing innovative financial product and service as well as providing intra-group support.Therefore,related party transactions regulations of financial holding company should be established appropriately.UK's reform of financial regulation conforms to the trend of financial development which promotes sound mixed operation practices with a perfect regulatory system.Viewing problems towards the regulation of related party transactions of financial holding company in China,it points out that UK's experience is to be particularly valued.Chapter two is about the introduction of current related party transactions regulations of financial holding company in China.It points out that China has preliminarily established corresponding regulations under the separate regulation system.Nevertheless,it still has a lot of problem not well solved.By introducing UK's regulation system,especially analyzing related party transactions regulations of financial holding company's intra-group support measures and ring-fenced body's activities,it concludes that it is not only crucial to clarify the roles and responsibilities of the regulatory agencies but also to the well-organized coordination and cooperation among them for accomplishing effective risk regulatory system.Chapter three discusses about the definition of related party and related party transactions of financial holding company between China and UK.By comparison,it points that within essentialist perspective,related party and related party transactions can be defined taking equity standard,management standard,actual control standard into consideration.Chapter four is about introduction of current related party transactions regulations measures on financial holding company in China specialized in the prohibitions and restrictions on certain transactions,information disclosures and internal control system.It points out that the above-mentioned measures taken by the regulators are not quite well enough to control the risks.It introduces UK's regulations measures for reference and makes suggestions for improving related party transactions regulations measures on financial holding company based on China's conditions.