在中国金融衍生品交易中的说明义务之局限及其改善方案

Abstract

Since the 1970s, as a risk-managing and high returns-creating financial product, the OTC derivative has been both favored and criticized by many. In fact, the OTC derivative is a customized private contract to meet an investor’s demand and is thus illiquid. Besides, it has no fixed physical exchange or a single institution for transaction, clearing and settlement. That is, besides market risk, investors with OTC derivatives are also facing enormous risk in liquidity, credit and settlement. This is because OTC derivatives were originally designed for managing high risk and high returns. The earliest investors were senior players with expertise and sharp awareness of all risks involved, and therefore precautionary measures. However, with the development of the OTC market, ordinary investors joined the game. In opposition to the financial institutions that are the sellers of the derivatives, faced with the complicated products and enormous potential risk, ordinary investors with little experience can be trapped in an informational disadvantage, or asymmetry of information. In order to virtually honor the basic principles of the modern private law—freedom of contract and caveat emptor, equal footing of both parties to a transaction needs to be guaranteed in the first place, which requires solutions to asymmetry of information. When forming a contract, the financial institution often fails to fully reveal all risks involved in a product, or even hide part of the facts from the investor on purpose. Under such circumstances, although out of free will instead of force in form, the contract formed is still blemished with injustice. Therefore, it can hardly be said to reflect the real consensus of the parties or be effective. On this basis, duty to explain in OTC derivative transactions has been recognized by law, theory and legal precedents in many countries. While China also seeks such changes in various fields, a decisive transformation has yet to be achieved in the capital market .Through legal provisions and regulations, China has set forth obligations to be borne and principles to be followed by financial institutions; however, like other regulations in China, they are fragmented into individual laws that often conflict with other similar provisions, thus requiring an urgent overhaul. In terms of overcoming these problems, consulting a country with a similar legal system and thereby forestalling subsequent problems will reduce the investment cost. China and South Korea both fundamentally have a continental civil law system and face similar problems in their respective capital markets. Therefore, referring to South Korea’s laws intended to protect investors will be an effective way to reduce cost in the process of introducing new schemes or amending bills. The efficiency and soundness of China’s laws and regulations regarding OTC derivatives markets is an important responsibility that Chinese policy makers and practitioners must bear, and it is crucial to adopt an open mind to internalize the experiences from various countries and an ability to introduce and localize new systems. China should refer to South Korea’s experience to avoid repeating the same mistakes in introducing a new system or revising existing laws. Referencing is not an act of mere imitation or rejection. It is using latecomer advantage to extensively analyze the problems occurring in South Korea, which, if kept in check, will allow China to kill two birds, financial stability and efficiency in the capital market, with one stone.