A Comparative Study Between Chinese and US Derivatives Regulations

Abstract

As a financial instrument that can both hedge risks and make speculative profits, derivatives are developing rapidly in the financial market. In order to ensure the stability of the financial market and the safety of investors, different countries have formulated different laws and regulations for supervision according to the actual national conditions. Taking China and the United States as the research objects, this paper studies the differences between their derivatives regulations. It is found that the regulation of both countries has gone from a loose history to a strict one and then with fine-adjustment according to the actual situation. However, because the United States has a relatively mature and developed financial market, it can better absorb certain external shocks. In the face of the derivatives generated by some emerging technologies, the regulatory strategy of the United States is more relaxed. For China, due to historical reasons, the development time and maturity of the financial market is far less than that of the United States, so the Chinese government will be more conservative and cautious in the formulation of statutory regulations. This is conducive to reducing systemic risk, protecting investors, and maintaining the stability of the financial system.