Corresponding Solutions to the Problems in China's Derivatives Market

Abstract

With the increasing uncertainty of the interest rate, exchange rate, inflation rate, and other factors in the financial market, financial institutions need all kinds of financial instruments in order to avoid financial risks, and in this situation, financial derivatives were born. With the progress of society and economic development, the financial derivatives market continues to expand in China. However, opportunities always coexist with crises, and there are still some problems in China's derivatives market. This paper studies the problems existing in Chinas derivatives market and puts forward corresponding solutions. It is found that problems such as an ineffective mechanism for supervision, insufficient innovation, immature investors, single market tools, and ineffective market functions still exist in Chinas financial derivatives market. To address these issues, China should improve the legal system, enhance transaction transparency, strengthen supervision and management, enrich the types of financial derivatives, cultivate qualified institutional investors, and reduce restrictions on overseas business.