How to develop the Financial Derivatives Market
Part of the central enterprises in the financial derivatives business losses are very heavy losses, people distraught deplored. Main reasons led to this tragedy there are two aspects: one is the domestic derivatives market developed, state-owned enterprises had to rely more on the offshore hedge financial derivatives market, with foreign firms, “one to one “the transparency of the OTC is very low, the risk is even greater implication. In this sense, further develop and strengthen the domestic derivatives market is a very necessary and urgent. On the other hand, from the central enterprise’s own point of view, some enterprises of the derivatives trading and spot size, direction, for a period not to match, in other words, the purpose of a transaction failure is to hedge and control risks, but an attempt by derivative Commodities Exchange to obtain high profits. In the financial derivatives are not familiar with the circumstances, the inevitable result of such speculative behavior is “come a cropper,” pay a high “tuition fees.”
Therefore, part of the central enterprises in the financial derivatives business, “not a anti-erosion meters speculative,” the case, you can draw three lessons: First, if the non-financial enterprises operating out of the real economy needs to use derivative financial instruments, then the , which should concentrate on how to hedge price risk, rather than attempt to profit through the price game. Second, hedge price risks in the process of selection should be a simple financial instruments, generally do not use very complex with a highly leveraged tool. In fact, in many cases, basic financial tool to meet the hedging needs. Thirdly, should the have to use complex financial derivatives, you have to listen to a reliable expert advice. Complex financial derivatives not a professional is difficult to understand without the guidance of senior experts and the blind do not work. In short, non-financial enterprises as far as possible a relatively simple choice of financial tools to hedge risks, Do not try to complex derivatives.
As for the central enterprises of the prosecution, it is very necessary. As victims, we must make their voices heard. Just like on the street to be robbed of the wallet, you will definitely not silent, he will have several more loudly shouting “robbery” bar. We sent the voice of prosecution, either to counterparties in the future the heart has scruples, you can also make more on his guard. If you are really able to reduce the number of losses in this way, then the better. However, we must soberly recognize the difficulty of which is relatively large. On the one hand from the international practice point of view, are not likely to win the other hand, is that even if they win the money can not be recovered because the counterparties are also lose light, and the regiment gone. For example, a lot of mini-bonds in Hong Kong buyers, many a demonstration, but Lehman Brothers company had closed, you whom to go ah?
China’s central bank have also launched the bond forward, forward rate agreements, foreign exchange swaps and other financial derivative products, are relatively simple and basic risk management tool, it does not have the highly leveraged nature. Enterprises in international economic relations, due to the interest rate, exchange rate variations and other factors will need to pass these simple derivatives to lock down and control risk. Participate in these financial derivatives transactions is not primarily financial institutions, but rather engage in related economic business enterprises, financial institutions provide some sort of trading arrangements. In the basis of comparison of asset securitization, the Chinese still in its initial exploratory phase; while more complex as the United States market, new financial derivatives, we can use to do their leveraged investment in financial derivatives, China has not yet. Therefore, the development of China’s financial derivatives market is still at an early stage, before the formal exchange market trading, OTC markets of limited size.
Financial derivatives are financial market development to a certain stage of the product of economic agents an important tool for the transfer of risk. Since the last century, since the 90s, China’s financial markets has made tremendous development by leaps and bounds, it already possessed a market-based development of financial derivatives market. From a practical demands, with the degree of internationalization of China’s economy growing as well as economic exchanges more complicated, a growing number of economic agents for the bulk commodities, exchange rate and interest rate hedging demand, the need to control and manage the corresponding risks of . At present, the Chinese market, many of the risk is difficult to hedge. Typically, the mainland stock market will be difficult to hedge the risk, because it is the single market. From a risk control perspective, must have the tools to hedge downside risks to the stock market. As another example, is associated with the fixed-income hedge interest rate, exchange rate risk of the tool, the current market is also relatively scarce. Overall, China’s financial derivatives market has great room for development, not because of the financial crisis, derivatives, has been much criticized and “Yinyefeishi” stalled, but the need to develop.
Vigorously developing the financial derivatives market is correct, but the original intention of holding what is very critical for the development of its relations with the operation of the market’s ability to sound. Now the market there is a tendency, that is, from an investment point of view the development of derivative financial instruments that the development and growth of financial derivatives market, for the majority of investors with another investment platform; in this platform, investors can take full advantage of derivatives tools, a small broad leverage to obtain high returns. In exploring whether the introduction of stock index futures and other financial futures, when, there is this tendency. This trend is horrific, and would mislead the development of the financial derivatives market, because it deviated from the essence of financial derivatives – control risk. Such a financial derivatives market is not a normal market, a highly speculative market, a possible collapse of the market at any time. In short, from the perspective of risk prevention, rather than from an investment point of view to consider the financial derivatives market development.
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