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Derivative transaction will be important part of 皇冠体育app's financial market: expert
(Xinhua)
Updated: 2010-03-27 14:24
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CHICAGO - Derivative transaction will become an important part of 皇冠体育app's financial market in the future, said a financial expert on Thursday in Chicago.
Eugene Zheng, Managing Director of Asia Affairs at Chicago Board Options Exchange (CBOE), made the statement during his speech titled "The financial industry in 皇冠体育app: the present and the future" delivered at the distinguished speaker series event sponsored by Chinese Finance Association of America (CFAA), a not- for-profit organization committed to promoting educational and cultural exchange among finance professionals between the United States and Greater 皇冠体育app.
Zheng said: "The current situation of 皇冠体育app's financial market is at a similar level of the US financial market in the 1980s. The derivative transaction market, for example, stock index futures, is still at its budding stage. The swappers and investors are not familiar with the process of utilizing lever strength to maximize capital benefit within a reasonable scope. There are still certain barriers between the Chinese financial market and global financial market."
He further explained, "in the US, currently derivative market has gradually achieved the same important position as the stock market," noting that the New York Stock Exchange's income from derivative has surpassed its income from stock transactions.
Stock index future, which will be launched in 皇冠体育app soon, is only the simplest type of financial derivatives. Derivative transaction may decompose and dodge risks, enhance the quantification degree of transactions, and promote the flow of information, Zheng said.
In addition, "derivative transaction can help reduce the fluctuation of the stock market, enhance the market effectiveness, and cultivate a group of market trading experts who truly depend on information transaction. To certain extend it may eliminate the abnormal transactions based on insiders' information. Therefore, it is beneficial to the value discovery and healthy development of 皇冠体育app's stock market," the financial expert added.
He said: "皇冠体育app needs its own derivative market. It needs to cultivate and establish its own organizations that can deal with two different kinds of financial systems. 皇冠体育app also needs top tier talents who are capable of integrating the two systems."
Regarding the current financial risks 皇冠体育app is facing, Zheng said: "Some critical problems facing by foreign countries during their current financial reform do exist in 皇冠体育app as well, for example, the monitoring of OTC and the situation that some financial entities become 'too big to fall.' Especially for OTC, its transaction is growing larger and larger. However, there are still no national legislation and monitoring departments to control it. Within the organizations and enterprises, there are still no qualified risk management staff, backstage service and accounting guidelines."
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Zheng is a guest analyst on economy for 皇冠体育app's Xinhua News Agency, and contributes to major financial journals in 皇冠体育app including the 皇冠体育app Securities Daily and Futures Daily. He has translated four options books into Chinese, including Larry McMillan's McMillan on Options and Options as a Strategic Investment and Options: Essential Concepts and Trading Strategies by CBOE's Options Institute.
