Research On Regulation Of OTC Derivatives

In the subprime mortgage crisis beginning in the United States and in the global financial crisis, OTC derivatives become unacceptable dangerous financial products among government officials, economists and ordinary citizens. At the same time, OTC derivatives are called out-of-control evil matters instead of perfect financial products full of liberty and freedom. After the global financial crisis, with the gradual stabilization of the global economy, governments changes their policies form the short-term rescue measures to formulating long-term financial regulatory reform plan. The reform of the regulation of OTC derivatives is also on the way.This thesis on the basis of the research of regulatory function of central counter-party(CCP) analyzes CCPs'self-supervision on OTC derivatives by comparing the clearing rules of CME and LCH.Clearnet Ltd and through the research on current situation of domestic supervision on OTC derivatives gives advice and make sugges-tions to the establishment and the improvement of the CCP system of Shanghai Clearing House to give effective solution to the reform of supervision on OTC deriva-tives in the post-crisis era. Except foreword, this thesis consists of four chapters and counts up to about 50000 Chinese characters.Chapter One is an overview on OTC derivatives regulation. The risks existing in the transactions of OTC derivatives are introduced to reveal the necessary of regula-tion on OTC derivatives and a definition of Regulation is made first. Through the in- troduction and analysis of the supervisions on OTC derivatives in U.K., EU and U.S. including the Industry Initiatives in U.S., this chapter reveals the problems of the regulation on OTC derivatives and provides basic background for the adoption of CCP self-regulation.Chapter Two analyzes several basic theoretical problems on CCP self-regulation and highlights the legal nature, the regulatory function and the power source of CCP clearing agency. Clearing agency substituting contracts through the CCP mechanism reflects its basic function of settlement while it is given the relevant regulatory func-tion as a social intermediary organization. The regulatory function is an inevitable choice for CCP to reach its own operational efficiency.Chapter Three is about the research on the specific institution and measures. It consists of two parts. The first part discusses the CCP legal institution of OTC deriva-tives by comparing the settlement rules of CME and LCH.Clearnet Ltd in respect to clearing members, substitutions and default rules. The second part mainly deals with CCP's self-regulation on OTC derivatives and the relevant legal issues.Chapter Four analyzes the current situation of regulation on domestic OTC de-rivatives transactions and makes proposals on the establishment of CCP self-regulation on OTC derivatives. First, CBRC, PBC and other regulatory agencies are introduced to reveal the shortages of domestic regulatory institution on OTC de-rivatives. Second, the CCP clearing system of newly established Shanghai Clearing House is predicted to make self-regulation on domestic OTC derivatives transactions.