Financial Innovation Is An Eternal Topic.

Financial innovation and regulation is a perpetual problem. First, we should legislate and supervise and innovate again, so that we can follow the rules of innovation, or innovate first, wait for problems to come out, and then legislate supervision. In a market with a lack of credibility, if the order is reversed, innovation and regulation will often lead to a tragic disaster.

There is no special rules and regulations for procedural transactions, nor are they regarded by the market, nor even seen by regulators. In the marginal stage of development, self development has also been out of control. Recently, Chinese authorities disclosed a major case. From June to early July this year, the stock and futures market fluctuated sharply. In the process of stock index futures contracts such as Shanghai and Shenzhen 300, China Securities 500 and Shanghai Stock Exchange 50, the sale of open positions and buying positions in ibid was at the forefront of the whole market. The average speed of the account group reached 0.03 seconds per second, and 31 orders were the most in one second, and the deviation between transaction price and market situation was significantly higher than that of other procedural traders. Programmed trading is an imported product that has come from western countries to China's financial market in recent years. Take the CSI 500 main contract in June 26th as an example, the sales volume of the account group of the company accounted for more than 30% of the total sales volume of the market. More than 400 times of the total sales volume of the company were accounted for; in the second quarter, the sales volume of the group was ranked more than 1200 times in the whole market; the deviation between the selling price and the market situation was 2 times more than that of the former 5 average traders. According to statistics, from the beginning of June to the beginning of July, the net profit of the company's account group reached 5 billion yuan.

The frequent transactions and huge profits have far-reaching impact on the stock market since the end of June. I think it is obvious to all of us. Why do the illegal violators dare to manipulate the profits of the futures market in a blatant way? I believe that China's capital market has futures trading regulations and securities laws, but the rules behind the procedural transactions are not related. It is the lack of strict procedural trading rules that allow participants to dare to test the law and scratch the ball. If there is no sharp fall at the end of June, the procedural transactions will not cause the management's high attention, nor will there be any subsequent specialized procedural regulations. Despite the timely progress, the tragedy has already led to the possibility of repairing the broken heart of the market in a short time to make up for the pain left in the market.

Financial innovation is an eternal topic, and there is no limit, only innovation can develop. But we have to admit that the old and old advantages are mature, rules and regulations, new vitality, but there are also new deficiencies. That is, there is no experience to follow. Once we break through the traditional legal framework and exceed people's expectations, it will lead to new immeasurable risks. If laws and regulations fail to be updated in time, supervision can not advance with time, then financial innovation can not bring about good social and economic benefits. Instead, the problem of spewing brings huge unexpected risks and even irreparable harm to financial innovation. Besides, financial innovation is a systemic innovation, involving many financial fields. For example, leveraged funds involve bank trust and securities dealers. Once risk spreads from the capital market, risks will spread to bank trusts as quickly as plagues, and shock waves will not end at one time. This shock wave has many rounds. As superposition of waves will bring superposition effect, risk will be out of control and cause catastrophe in the whole financial market.

It is precisely based on the risk that the government can use the government funds to buy the market directly. Therefore, I believe that financial innovation is always associated with risks, and must be prudent and prudent in the framework of the law. We must not indulge in any way, nor can we indulge in the pursuit of some kind of demands and pass the river with a feeling. Although it is true, the risk must be estimated in advance. Otherwise, we should step into the unfathomable whirlpool. That is the beginning of the tragedy. We must ensure that the policy is in the front and act in the future, though conservative, but the risk is controllable and the regulatory basis is valid. Once we leave the pivot of the policy and regulation, innovation is the prejudicial of lawlessness, and the risk spillover is difficult to control. This reason not only applies to China, but also applies to the world. Because of the Enron incident, the United States only had the harsh Sarbanes act, which made the counterfeiters lose their courage. It was precisely because of the securitization of mortgage loans that led to the outbreak of the subprime mortgage crisis. The jade of his mountain can attack the stone, and the Chinese regulators take warning.

Leverage trading is also the case. In recent years, China's stock market has been running low for a long time, which has made management miserable and has been criticized by the market. In order to introduce more OTC funds, in order to boost the market, management encourages investors to use the two financial transactions and use leverage trading. Naturally, it has a blind eye to the over-the-counter capital allocation business. Even at the early stage of the bull market, it is considered to be of great benefit. In the call of an official bank capital to enter the market, it also supports the real economy. Under the stimulation of the market earning effect, investors lose their sense, ignore their investment experience, ignore their ability to bear, blindly use leverage, and blindly improve. Leverage ratio The off site leverage rate is generally 3-10 times higher, and the scale is hard to estimate. Some think 2-3 trillion yuan, some think it is as high as 5 trillion yuan or more, resulting in excessive expansion of leverage funds in the short term. Too much leveraged leverage has brought great risks to the market. Once the wind is blowing, the stock market will burst out of control, and the stock market will spiral uncontrollable. Finally, the tragedy of the Chinese stock market has become a unique slump. The government has to use 1 trillion and 500 billion yuan or so to go directly to the rescue market and have to suspend the lever to restart. IPO We have to introduce various temporary regulations to bring the Chinese stock market back to life, but it is too early to say that the bottom is going up.

On the two fusion capital It is more transparent and more standardized, but the off site leveraged fund is not regulated by the SFC. It also involves the CBRC, because the management of the trust CBRC is precisely a line of three meetings and separate management, which leads to the supervision of the off-line allocation of funds to become the three regulatory zone. Despite the fact that the securities and Futures Commission has stepped up its efforts to rectify the situation, and severely punished the OTC distribution as represented by Hang Seng electronics, the severe punishment can not make up for the huge losses of investors and is unable to make up for China's economic losses. Although leverage has brought about a multiplier income, the same risk of enlargement has not only brought huge losses to the country, but has had to use nearly 1 trillion and 500 billion yuan to save the market, which has brought losses of nearly 200 billion yuan (after yesterday's surge and losses greatly reduced). What is more serious is that the rescue measures are condemned by some people who are not interested in the international market, and IPO is also suspended.