| The OTC derivatives market is an important part of the financial market.Despite its relatively short history of development,China’s OTC derivatives market has shown rapid growth in transaction scale in recent years and the market system has been initially established.At present,China’s major OTC derivatives include interest rate and exchange rate derivatives of commercial banks,specifically interest rate swaps,bond forwards,RMB foreign exchange swaps,forwards and options;OTC options and income swaps of securities companies;OTC swaps,forwards and options of risk management subsidiaries of futures companies,etc.The Bank of China’s "Yuanyou Bao" incident has exposed the regulatory dilemma of OTC derivatives,which are vaguely defined in nature,flawed in terms of compliance and hit the soft spot of the current regulation.Therefore,under the current situation of the booming market,a regulatory system for the OTC derivatives market has yet to be constructed,and improving the regulation of the OTC derivatives market has become a common demand of market participants and regulators.The problems of China’s current OTC derivatives regulatory framework are mainly reflected in the lagging legislation and imperfect financial infrastructure.The lagging legislation makes the regulatory norms complicated and low level of effectiveness,resulting in the lack of unified coordination of regulatory authority,the fragmentation of regulators,and the lack of global judgment of financial regulation on the risk of OTC derivatives market.The imperfect construction of financial infrastructure is reflected in the lack of jurisprudential support for the use of central counterparties,and how to seek jurisprudential support for the central counterparty settlement system in futures and derivatives markets within the framework of contract law norms stipulated in the Civil Code is an important issue to be addressed in futures law legislation.Moreover,due to the relatively limited application in the OTC market,it is difficult to reflect the advantages of the central counterparty system in ensuring the security of transactions,enhancing market transparency and maintaining the overall stability of the market.The U.S.,one of the most important OTC derivatives markets,has implemented a strong reform of financial regulation after the financial crisis.The other mountain’s stone can be used to attack the jade.The study of the U.S.OTC derivatives market regulatory reform can provide a reference for the improvement of OTC derivatives regulation in China.Before the financial crisis,the U.S.CFTC and the SEC in the field of over-the-counter derivatives existed for decades of regulatory competition,which led to both sides in the field of derivatives regulatory activities are often subject to pressure from the other side and difficult to carry out.For commercial banks,the main participants in OTC derivatives,they were able to obtain exemptions from the Commodity Exchange Act,and the regulatory gap made banks the largest speculators in the OTC derivatives space.After the financial crisis,reform measures centered on the Dodd-Frank Act reorganized the OTC derivatives market,bringing order back to the OTC derivatives market by clarifying minimum capital and margin requirements,promoting OTC trading and centralized clearing,and restricting commercial banks’OTC proprietary business.This series of measures has important implications for China.It is necessary to form a unified regulatory framework guided by the concept of functional regulation,to promote the "inside-out" of OTC transactions while taking into account the advantages of OTC transactions,and to enhance the transparency and openness of OTC markets through the construction of financial infrastructure.The inclusion of OTC derivatives in the scope of the Futures Law is both necessary and feasible.In terms of necessity,the Futures Law should respond to the development needs of the OTC derivatives market,and considering that the Futures Law should establish regulatory objectives focusing on the prevention of systemic risks and the protection of financial consumers,the regulation of the OTC derivatives market is the rightful purpose of the Futures Law.In terms of feasibility,OTC derivatives and futures are isomorphic,with similar economic substance and similar legal structure,so the regulation and control of futures can also be applied to OTC derivatives.In this regard,a unified regulatory framework should be formed with functional regulation as the main focus,supplemented by institutional regulation,in which the regulatory authority of the "one bank and two commissions" in the OTC derivatives market is divided and coordinated,and it is clear that the SFC adopts unified regulatory measures for financial instruments with the same economic substance in the OTC derivatives market.The People’s Bank of China(PBOC)carries out macro-prudential supervision for the direct purpose of preventing the outbreak of financial systemic risks because of its functions of improving the macro-control system,formulating and executing monetary policies and assuming the responsibility of lender of last resort,while the CBRC carries out micro-prudential supervision for the purpose of supervising the sound operation of banks and other financial institutions and protecting financial consumers.In terms of financial infrastructure construction,firstly,it is necessary to provide a legal basis for central counterparty settlement under the regulation of contract law,i.e.,to achieve the legal effect of debt novation through the general transfer of contractual rights and obligations,and secondly,it is necessary to legislate to confirm the involvement of central counterparties in the OTC derivatives market,and to delegate to the SEC the right to review and judge whether specific varieties of OTC derivatives are included in the centralized settlement of central counterparties.In this way,a synergy is formed in both institutional regulation and financial infrastructure construction to improve the regulation of the OTC derivatives market. |
PDF Full Text Request