Financial securities title paper format requirements

Abstract: Stock index futures will soon be listed on China's financial market, which will have a profound impact on the operation of China's giant economy. On the one hand, it is conducive to promoting the realization of China's monetary policy objectives, is conducive to China's more foreign investment, and is also an objective requirement for China's financial deepening.

On the other hand, the listing of stock index futures may also lead to the emergence of a bubble economy, increasing the risk of financial markets and causing catastrophic stock market panic and other negative effects. Therefore, we must adhere to the principle of benefiting and avoiding harm, and suppress its negative impact as much as possible. As a financial derivative with strong vitality, stock index futures has successfully launched the world's first stock index futures contract transaction in February 1982, the value line comprehensive index futures contract transaction, many in the world. Both the developed securities market and the emerging securities market have successively launched stock index futures trading. At present, the global stock index futures trading volume is already 2.2 times the trading volume of the stock spot market. In the context of China's participation in wto, it is undoubtedly necessary to launch stock index futures as soon as possible to improve China's financial market operation mechanism, avoid market risks, and participate in international financial market competition. However, any new things will inevitably have positive and negative effects. The impact of the listing of stock index futures on China's giant economy is also true.

1 The positive impact of stock index futures listing on China's giant economy

After the listing of stock index futures in China's financial market, it will inevitably become one of the most popular trading varieties in the market with its many advantages such as hedging, speculation and arbitrage. Its launch will have many beneficial effects on the operation of China's giant economy.

1.1 The promotion of stock index futures on the operation of monetary policy Stock index futures are conducive to the realization of savings diversion and broadening the sources of funds in the securities market. In recent years, in order to get rid of deflation, the government has actively promoted expansionary monetary and fiscal policies to stimulate investment and consumption. However, the effect of the central bank's eight interest rate cuts and the interest tax is not obvious. According to statistics, as of the end of September XX, the balance of RMB savings deposits of residents reached 8.4 trillion yuan, an increase of 104.6 billion yuan over the beginning of the year. The common people would rather choose low-yielding savings, but they are reluctant to enter the securities market to participate in investment to obtain high returns. It is not because they have no investment enthusiasm. On March 10, XX, the Ministry of Finance issued a 60 billion yuan certificate-type government bond, which was quickly Snatched out.

The author believes that the main reasons for their holding of the currency are: 1 China's securities market risk is too high. From the perspective of stock market analysis, the system risk is very large, accounting for about 65% of the market risk, while most of the developed countries such as the United States are only 30%. The systemic risk of the stock market in China is almost impossible to prevent, so the status quo of the securities market Generally speaking, there is insufficient confidence. The stock index futures are generated based on the expansion of the stock market and the inherent requirements of investors for risk management. However, China's stock market just lacks such tools that can circumvent systemic risks. 2 The operating mechanism of the securities market is not perfect, and there are too few trading varieties available for investors to choose. The Chinese stock market is only a one-way long market, and there is no short-selling mechanism. The introduction of the short-selling mechanism of stock index futures allows institutional investors to switch from a single mode of waiting for stock price rise to a two-way investment model after the original purchase. Whether the stock market rises or falls, investors can make full use of the futures market hedging mechanism to effectively avoid market system risks. As an important investment tool, stock index futures help to form a multi-level investment approach and a multi-angle investment portfolio to meet the different needs of investors. As long as there are abundant investment products in the securities market and can provide effective risk management tools, it can greatly stimulate investors' interest in investment. Now the huge savings deposit lying in the bank will become the largest supply of funds in the securities market. . In this way, the monetary policy goal of savings diversion must be achieved. The development of stock index futures is conducive to enhancing the strength and flexibility of the central bank's macro-control.

Due to the lack of effective risk aversion tools in China's stock market, many investors, especially institutional investors such as securities investment funds and insurance funds, generally feel that the risk of entering the stock market is relatively high. The development of stock index futures trading can reduce the transaction costs of institutional investors, increase investment varieties, improve the efficiency of capital utilization, and provide them with effective risk management tools. Therefore, the listing of stock index futures can stimulate their investment enthusiasm, increase market liquidity, promote the long-term activity of stock market transactions, and promote the expansion of financial market scale. The larger the size of the financial market, the more obvious the effect of the central bank's use of adjusted margin ratios to regulate market size. On the one hand, the central bank can directly deal with institutional investors in the financial market through open market operations to achieve macroeconomic regulation and control; on the other hand, it can adjust the margin ratio at any time according to the financial market and economic situation, and indirectly control the inflow of securities. The amount of credit in the market controls the maximum amount of money in the securities market. In this way, the central bank can effectively curb excessive securities speculation, and it will not rashly adopt a policy of tightening or loosening the money supply, which will help avoid the volatility of financial markets.

1.2 The development of financial futures trading such as stock index futures is conducive to attracting foreign investment, which is conducive to China's securities market and international integration. From the perspective of international financial market, since the mid-1980s, the financing structure has undergone major changes, and the trend of securitization in international financial markets has increased. International securities have become the main channel for international financing. In 1986, international bank loans accounted for only 29% of total international credit, and international bond issuances reached 71%. After the 1990s, this trend has not changed. At present, financing through capital markets has become the main way for countries to attract foreign investment. China has joined wto, China's capital market should be gradually opened to the outside world within five years, the securities market must be in line with international standards, and it must be open to foreign investment, and foreign investors will gradually enter the Chinese capital market. At present, there are three main ways to attract foreign investment in China: direct investment, use of foreign loans, and other foreign investment. The main financing method is to attract foreign direct investment, and the proportion of financing through the issuance of international securities is very low. This is obviously contrary to the trend of securitization in the international financial market. Moreover, in the past decade or so, some emerging industrialized countries in Southeast Asia have greatly improved the development of their own economies by relaxing the control of capital projects and constantly improving their financial market operation mechanism, and their financing channels are large. Most are securities investments rather than direct investments. The opening of the securities market will inevitably be accompanied by increased risks. Some international speculators will take the opportunity to launch an impact on China's financial market.

If a country cannot provide foreign investors with opportunities and conditions to adequately circumvent financial market risks, it will not attract investors. In addition to the driving of interests, the flow of international capital is also an indispensable reason for a sound risk prevention system. Therefore, stock index futures, as a highly efficient risk management tool, also has an irreplaceable role for China. In today's economic globalization, if we do not develop modern financial derivatives such as stock index futures as risk hedging instruments, then China's capital market will be imperfect in terms of functions and systems, not only difficult to integrate with international financial markets, Moreover, it is difficult to provide a risk-avoiding place for the entry of international investment capital, which is not conducive to attracting a large amount of foreign capital in China. The development trend of China's financial market internationalization requires that the financial system, financial institutions and the organization and operation mechanism of financial markets must move closer to international practices. Therefore, we must launch trading tools such as stock index futures as soon as possible, continue to enrich trading varieties, reduce investment risks in financial markets, attract more foreign investors to invest in China's securities market, and increase the proportion of securities investment in China's total foreign investment. In order to promote the development of China's financial market to the direction of financing securitization.

1.3 The introduction of financial derivatives such as stock index futures is a requirement of China's “financial deepening”

[5]

"Financial deepening" is a socio-economic process proposed by American economists Esshaw and McKinnon. It mainly means that developing countries should abandon excessive intervention in the financial system and financial markets and liberalize control over interest rates and exchange rates. Make them fully reflect the use of foreign exchange and funds, so as to give full play to the role of market mechanisms. Since China's long-standing "financial repression" can no longer meet the needs of economic system reform, financial reform is inevitable. The financial reform that is going on in China is essentially financial deepening. The inevitability and urgency of China's financial deepening determine the inevitability of developing derivative financial instruments. The derivative financial instrument market is an inevitable result and a high-level form of financial market development. Its development is closely related to the marketization process of the overall economic system reform. The reform of the supporting process itself requires the development of the financial market to be compatible with it. The reason why financial futures such as stock index futures are listed in China is a key step in financial reform. First, because the subject matter of stock index futures is the stock index. In the current Chinese stock market, the stock market is relatively mature and more market-oriented. High. After the successful listing of stock index futures, we should further introduce new trading tools such as interest rate futures and foreign exchange futures. From the international experience, the securities market has developed to a certain scale. After the original production period, stock index futures and government bond futures trading should be and can be established.

Second, since the US kcbt launched its stock index futures for the first time in the world in 1982, this derivative has achieved good development in various countries. Stock index futures have become the first choice for opening derivative transactions in emerging securities markets. Leo Melamed, the father of world finance, attributes the important economic functions provided by financial futures such as stock index futures to three aspects: risk management; price discovery; transaction efficiency [1]. At present, actively promoting the listing of financial derivatives such as stock index futures has also played a positive role in promoting China's financial marketization reform: it is conducive to avoiding systemic risks in financial markets; it is conducive to better exerting the function of price discovery, and further improving and perfecting the market. Mechanisms to promote the common prosperity of the spot market; help increase market liquidity and activate financial markets. Therefore, China's "financial deepening" requirements will also objectively promote the listing of financial derivatives such as stock index futures in China as soon as possible.

2 The negative impact of stock index futures listing on China's giant economy

Although the listing of stock index futures will bring various benefits to the operation of China's giant economy, we should also treat any new things in a dialectical manner. We must have a clear understanding of the negative impact it may have on the giant economy. In order to formulate corresponding countermeasures and suppress their negative effects.

2.1 The listing of stock index futures may lead to the emergence of a bubble economy. The empirical research conducted by Kuserk and Cokee et al. on the US stock market shows that after the stock index futures trading, the size of the stock market has attracted the participation of a large number of arbitrageurs and hedgers. Both liquidity and liquidity have been greatly improved, and the trading volume of the stock market and the futures market has been promoted in both directions [2]. While the stock futures market is active at the same time, it may push the stock index to rise step by step, resulting in a high bubble in the economy. Once this bubble bursts, it may cause the entire financial market to fall into chaos, which will have a devastating impact on the entire national economy. The fact that Japan’s economy has been sluggish since the 1990s is a good example. The Japanese economy experienced a period of rapid development in the 1970s and early 1980s. Since the mid-1980s, there have been a lot of bubbles in the economy. From 1985 to 1990, the average growth rate of Japanese national income was only 5.7%. The average growth rate of its stock price was as high as 31.3%, and the land price was 14%. By the end of 1989, the average stock price had gone straight from 8,000 yen to 40,000 yen, an increase of 400%. Since 1990, the bubble in the Japanese economy has finally been reflected in the macroeconomic indicators. In this year, Japan’s economic growth rate has dropped by more than 60% from the previous year, and the huge economic bubble supported by good economic expectations. It also shattered. In just one year, the Nikkei index fell by 60%. Many economists believe that the bursting of the Japanese bubble economy is one of the triggers for the 1997 Southeast Asian financial crisis. In that crisis, Sanyo Securities, one of the world's fourth largest investment banks, and one of Japan's top ten securities, closed down, and the Japanese financial market was almost devastated. Therefore, with Japan's foresight, before the stock index futures are listed, we must take a cautious attitude and carefully take precautions to avoid the emergence of bubbles in the financial market.

2.2 Stock index futures listing may increase the risk of financial market Although stock index futures is a tool that can effectively prevent systemic risks in financial markets, but from the mechanism, stock index futures can only transfer systemic risks, but can not eliminate systemic risks. Stock index trading simply transfers the risk from one party to the other and does not reduce the overall risk of the stock market. Some people think that the collapse of the Wall Street stock market on October 19, 1987 was caused by stock index trading. The Wall Street Journal issued a document accusing the black flag of the black flag on the second day of the US stock market crash. In addition, the stock index futures trading is a margin system, which provides investors with the opportunity to make a big fight, and also opens up a channel for speculators. After financial liberalization, financial markets with smaller trading volumes are likely to become targets of international speculators. Such attacks typically operate in conjunction with the currency and capital markets, the spot and futures markets. Speculators built a large number of empty positions in the futures market, took the lead in selling stocks in the spot market, suppressed stock prices, created a panic atmosphere through the media, caused a sell-off frenzy, and caused stock prices to rush, thus making profits in the futures market. A good example is the 1997 US hedge fund-led attack on Hong Kong's financial markets.

2.3 The listing of stock index futures may cause catastrophic stock market panic. Combined with the current situation of China's securities market, we can find that the risk characteristics of China's stock market are different from those of developed countries. The Chinese stock market is compared with the mature securities market of the developed countries. The same is that the price volatility risk dominated by the natural forces of the market is only one of the market risks. The market risks that may have more Chinese characteristics are also: First, the policy market and Speculative city, corporate fraud and false information risk market. Events such as Qiong Nanyang, Yinguangxia, and Dongfang Electronics have been exposed. Second, the particularity of China's stock market structure, that is, tradable shares account for 1/3, non-tradable shares account for 2/3. This special shareholding structure affects the representation of the stock price index for the development of the stock index futures market. The stock price index cannot truly reflect the operating conditions of listed companies and the development trend of the giant economy, which means that the stock index is difficult to truly reflect. Market price level. Third, the stock market lacks a short-selling mechanism. Trading in stock index futures is two-way, and can be either long or short. And China's stock spot market can only do more, can not be short. A very important function of futures is the hedging function, which is mainly achieved by reverse operation between the stock index futures market and the stock spot market. Only by introducing short selling mechanism in the stock spot market can we truly realize the hedging function of stock index futures. For example, the global stock market crash in October 1987 caused the Hong Kong HSI futures to appear the most serious crisis since its inception in 1986. The stock index futures contract could not be honored, and bad debts were forced. The Hong Kong HSI futures market was suspended for four days.

After the relevant expert analysis, one of the reasons for the HSI futures crisis was that the trading mechanism was not perfect. At that time, short selling was not allowed in the Hong Kong stock market, which made the two normal operating functions of HSI futures hedging less. The gambling of the market. Stock index trading works best in the US stock market and is the fastest growing, related to the short selling mechanism in the US stock market. Therefore, when the current credit crisis in China’s securities market is serious, stock price distortions caused by equity splits, stocks are fully circulated, and stock markets cannot be sold shortly, problems such as stock index futures may be intensified, and the stock market may be intensified. Fluctuations have triggered investors' psychological expectations that market prices will continue to fall, causing a massive sell-off frenzy, leading to irrational stock price declines and stock market panic.

3 Difficulties in the listing of China's stock index futures Although the listing of stock index futures is already imminent, there are still many shortcomings in China's futures market, and it is urgent to improve them in the following aspects.

3.1 Accelerate the improvement of the futures market regulation system, strengthen market supervision, and introduce the revised Interim Regulations on Futures Trading Management as soon as possible to speed up the legislative process of the Futures Law. At present, regardless of whether stock index futures are put on futures exchanges or stock exchanges, they face legal obstacles. Judging from the special historical process and market status of China's securities and futures market, we should make some amendments to the provisions of the Interim Regulations on Futures Trading to prepare for the launch of stock index futures. In the long run, in order to improve the legal system, the "Futures Law" should be formulated in accordance with international practice, and specific legal provisions should be made for the supervision, trading, settlement, and risk control of financial futures such as stock indexes. Strengthen industry supervision and form an integrated supervision system. Drawing on the successful experience of foreign countries, we will improve the established three-level supervision system, implement the market-oriented management principles, clarify the respective rights and responsibilities of the three-level supervision organizations, and increase the intensity of investigating and dealing with insider trading and manipulating market prices. Ensure that the market is open, fair and just.

3.2 Cultivate the main body of the futures market and form a reasonable market participant structure as soon as possible. Compared with foreign mature markets, the proportion of institutional investors in China's market is low. For example, as of the first half of XX, China’s individual investors accounted for 99.4% of the total number of open accounts, while institutional investors accounted for only 0.6%, and the proportion of institutional investors was too low. A perfect stock index futures market should have three types of trading entities: hedgers, arbitrageurs, and speculators. The three are indispensable to ensure the balance and function of the supply and demand of the stock index futures market. Among these three, we must strengthen the cultivation of hedgers, develop large securities companies, fund management companies and insurance companies into the main body of hedging transactions, appropriately relax the financial restrictions of the futures market, and allow bank funds to participate in the market. Period hedged transactions. At the same time, we actively develop various arbitrage transactions and guide speculators to conduct rational transactions to promote the function of stock index futures.

3.3 Improve the market operation mechanism At present, in the absence of stock market short-selling mechanism to open stock index futures and trade, investors can only do more in the spot market, and hedge the futures by shorting futures. This kind of market asymmetry mechanism implies the inherent inertia that leads to stock market instability. If you want to give full play to the hedging function of stock index futures and improve the efficiency of the stock index futures market, you must also allow long and short positions in the stock spot market. Therefore, the short selling mechanism should be introduced in the stock spot market in China as soon as possible.

3.4 Accelerate the training of talents in the futures industry and the structural adjustment of futures operating institutions The talents of the futures industry are the driving force for the continuous innovation and development of the futures market. At present, China's futures market is relatively scarce, and it is far from being able to adapt to the needs of the development of the futures industry after joining the wto. Therefore, at this stage, it is necessary to strengthen the training of various professionals and senior executives in the futures market. Although China has a number of brokerage companies that have begun to operate and operate commodity futures, there are some structural defects compared with some mature foreign futures institutions: “scale structure defects, equity structure defects, governance Structural defects, layout structure defects." [3] Therefore, the futures business structure should be classified as soon as possible to form a futures brokerage industry system with reasonable structure and outstanding functions. Encourage futures brokerage companies to increase capital and expand shares, allow financial institutions and foreign institutions to participate in shares, and improve corporate governance structure. Today's social economic globalization and financial internationalization have become an irreversible trend. We can't avoid the risk caused by the opening up of the capital market. On the contrary, we should take a positive attitude to meet this challenge. After all, the benefits of stock index futures listing are far more than what it might bring. Disadvantages, as long as we can do a good job in all preparations and preventive measures, the promotion of stock index listing for China's giant economic development will not be underestimated. Therefore, we should accelerate the pace of reform of financial liberalization, further improve and deepen the operation mechanism of financial markets, accelerate the research and listing of various derivative financial instruments such as stock index futures, and actively promote the internationalization of China's financial market.

references:

[1] Yang Yuchuan. Research and planning of financial futures options market [m]. Beijing: Economic Management Press, XX.259.

[2] Yang Maijun. Stock Index Futures Trading [m]. Beijing: China Price Press, XX.216.

[3] Xu Bin. Stock index futures and China's capital market [j]. Northern trade, XX,: 46~48.