Faced with the vigorous development of derivative business, the previous supervision methods are facing severe challenges. One of the reasons is that the development of financial derivatives business is amazing, not only the types of transactions vary widely, but also the operating procedures are quite complicated. It is difficult for unified external supervision measures to accommodate all existing products, let alone new products that may be derived. One of the reasons is that under the new market conditions, in order to maintain or increase the market share, financial institutions will take advantage of the loopholes in the existing legal system and try their best to avoid supervision, thus resulting in the so-called "regulatory arbitrage" phenomenon. In this situation, international financial regulatory agencies and financial regulatory authorities in various countries have gradually realized the importance of enabling market participants to establish a sound internal risk control mechanism and achieve self-discipline. Recently, while strengthening financial supervision, western countries are increasingly inclined to supervise financial institutions through the supervision of market participants. Market participants, especially financial institutions, are directly engaged in the operation and trading of derivative business, and always pay attention to the actions of banks for their own interests, which can timely and effectively reflect the changes in the market and trading positions, and its effect is more timely and effective than that of independent actions by regulatory authorities. As long as a scientific internal risk management system is established, it is possible to control risks within an affordable range, which will inevitably promote the safer and more stable operation of the international financial market.

Of course, in order for the risk management mechanism to play its role, we must solve the problem of information disclosure. Because derivatives transactions are off-balance-sheet businesses, market participants cannot obtain enough information through financial statements to make accurate investment decisions or analyze the credit status of counterparties. In order to solve this problem, some large international research institutions and financial regulators have made useful explorations. June 1996 financial accounting standards board (FASB) issued a new draft accounting standard, requiring all derivative transactions to be recognized at fair value in the balance sheet. They believe that the new standards can make the financial statements truly reflect the positions of derivative contracts, and make investors more clearly understand the investment positions and risk management strategies of companies or institutions. 1In July, 1999, the Basel supervisory committee published a document entitled "Best example of loan accounting treatment and information disclosure"; The Committee has been committed to establishing a set of international financial accounting standards, requiring market participants to implement the new accounting standards from the fiscal year of 65438+1 June 1999 15 (institutions that use the calendar year will implement them from June 65438+1October 20001). If this accounting rule is put into practice, it will have a great impact on the accounting, financial situation and risk management of various financial enterprises; By consolidating financial statements, we can enhance the transparency of banking business, improve the efficiency of financial derivatives, ensure the stable operation of the financial system and prevent the occurrence of systemic risks.

With the unprecedented development of the internationalization of financial derivatives, cross-border derivative transactions are increasing year by year, which makes the connection and dependence between financial markets in various countries continuously strengthened, and various risks are easily transferred and dispersed evenly among countries. However, the cooperation between financial regulators in various countries on international financial derivatives is relatively lagging behind, which leads to a regulatory vacuum in cross-border derivative financial transactions. Through the sub-global or regional financial crisis, financial regulatory agencies in various countries have recently realized the importance of strengthening international cooperation, and are actively striving to strengthen regulatory cooperation among countries, banks and non-bank financial institutions.

The Basel Committee on Banking Supervision, with the central bank of G- 10 as the main body, issued a series of joint initiatives. In addition to the formulation and revision of the capital adequacy ratio standard, 1994 and 1995 jointly formulated the Guidelines for Risk Management of Derivative Financial Products and the Proposal on Strengthening the Disclosure of Transaction Information of Derivative Financial Products of Banks and Securities Companies. 1996 and 1997 respectively issued the Proposal on Improving Statistics of Global Derivatives Markets and the Initiative on Clearing Arrangements for Trading Derivatives. All these can control the trading risk of financial derivatives to a certain extent.

The Mexican financial crisis at the end of 1994 and the southeast Asian financial crisis in the second half of 1997 exposed the inefficiency of banking supervision in these countries and regions. To this end, the Basel Committee put forward the methods and principles for these developing countries to formulate effective risk prevention in times of crisis, and with the help of international financial institutions and other organizations, put forward specific suggestions for implementation methods, which were well received by the banking circles all over the world.

In addition to the Basel Committee on Banking Supervision, similar regional financial supervision committees have emerged, such as the Central and Eastern European Group of Banking Supervisors and the Arab Group of Banking Supervisors. Moreover, in order to ensure the safe and stable development of the global financial market, various international regulatory agencies have always maintained cooperation and exchanges. The Basel Committee on Banking Supervision formally discussed a series of issues related to the management of international financial groups with the International Securities Commission and the Joint Committee on International Insurance Supervision. The securities regulatory agencies of various countries have also strengthened the regulatory cooperation in the derivatives market. 1995 16 representatives of regulators in charge of futures and options markets gathered in windsor, England, to study the international cooperation in the supervision of derivatives trading, and issued a declaration, emphasizing the cooperation among market regulators and urging them to establish bilateral and multilateral information sharing mechanisms to exchange information regularly and in emergencies.

In short, there is still a lot of work to be done to achieve effective risk supervision, but as long as the financial supervision institutions of various countries and international financial supervision institutions work together, strengthen international communication and make unremitting efforts, they will certainly be able to explore a scientific way to improve supervision and ensure the stable, safe and benign operation of international financial derivatives.