The Study Of Structure Of Financial Derivatives In Industrial And Commercial Bank Of China

Firstly,the article began with the current status of financial derivatives in Industrial and commercial bank of China(Named: ICBC) and illuminated introduce of financial derivatives to ICBC ,introduced the basic category of financial derivatives, characteristic, functions and market requirements. According to point of financial engineering science, there are four kind of basic financial derivatives including forward, future, option, swap. And the article introduced the characters and functions of financial derivatives,the characters are as followings, profit and lost unknown, obligation, cash substitution, on basic constitution, danger elusion, leverage and dummy. The functions are value protection, price discovery, speculation, constitution combination. Although financial derivatives had been used broadly all over the world from the 70times,financial derivatives had been understood by Chinese people from August of 2003 in China. With the further understanding, there are sharp demand for 3 kinds of financial derivatives which can keep away the financial crises. One is foreign exchange financial derivatives'demands ,another is interest rate financial derivatives demands and the other is stock market financial derivatives demands。But with the developing of the financial derivatives, China need to establish and strengthen the inner regulations of financial derivatives, which including:Risk evaluation rules;Risk quota supervision rules;Short cut and consummate message systems;Inner control and audit .On the basis of the development status of financial derivatives in China, this article will set forth the financial derivatives's construction of ICBC. Firstly the article introduced the individual types of financial derivatives provided by domestic commercial banks, and gave the further explanation the disadvantages of developing financial derivatives in China, and finally illustrated the effects of financial derivatives within ICBC which including:elusion and supervision of systemic financial risk; Building up antirisk capability with ICBC and whole financial system;To improve the economy efficiency;To open broadly service scope of ICBC and create new profit . Secondly,with the understanding of the basic construction,this article paid more attentions to make research on financial derivatives's construction of ICBC. The construction of ICBC's financial derivatives is made up of interest rate financial derivatives, and ICBC are developing the individual financial derivatives energetically.With the development of financial derivatives,it is turning direction to develop from elusion of risk to value added business. General financial derivatives of ICBC including short term financial derivatives in market; metaphase and long term public debt future; interest rate swap;signing interest contract future. The financial derivatives which provided by ICBC to individual customer can be set off into two kinds: individual foreign financing product relative with interest rate and financial derivatives relative with foreign exchange . But, with the development ,`the prevention of risk is still the most important function all over the world. Through the risk analyses of financial derivatives, this article put forward to the financial risk protection actions in details. In general, the risks of financial derivatives mainly include: credit risk, market risk, liquidity risk, operation risk and law risk. On the basis of the opinion for risk management from ICBC ,ICBC should keep to following principles: knowing well with risks; distracting from risks;eluding from risks; retracting risks and checking back one another with risks. Thirdly, this article paid more attentions to the research of financial derivatives's risk elution on interest rate financial derivatives fromICBC'financial derivatives .Through the examples of interest rate financial derivatives from ICBC, it bring forward the action against risk in details. At general,the article introduced the backgrounds of advancing status of interest rate financial derivatives at ICBC. Because financial derivatives market developing has been in the underway phase in China, ICBC should push the innovation course of financial derivatives according to following four principles, which are risk beginning from low to high;financial derivatives construction adjustment from briefness to complication; combination between international current mode and domestic given market environment; product innovation serving for whole market. And the article pay more attentions to interest fate swap as most important instrument at ICBC. Article used the interest financial derivatives as an cut-in point to introduce practice operation at IBRC. Then through examples,it expatiated the elusion actions against risks. Eg:actions against risks from dollar capital which IBRC can use methods of future settlement or dollar structural deposit. At present ,the financial derivatives's construction adjustment, especially how to deal with the elution of financial risk is researched by domestic commercial banks. The article had researched and analysed the interest rate and foreign exchange financial derivatives according to market requirement theory and reference to a lot of domestic excellent works of financial derivatives ,we find that ICBC are optimizing the construction of financial derivatives step by step in order to elude the market risk and assets protection .