| Summary: | 碩士 === 東吳大學 === 法律學系 === 99 === In today's atmosphere of heated competition among international corporations, countries have taken on the trend of loosening or lifting various regulatory restrictions in order to stimulate markets and facilitate economic growth. This trend of deregulation has resulted in the gradual deterioration of financial regulatory soundness over the past 30 years. Since opening up the market for financial derivatives in 1995, our government has allowed the introduction of new financial derivatives almost every year. As such, a revamping of the financial regulatory system should be undertaken; a comparison of financial regulatory measures with those of other countries is an important approach to this end.
There are two aspects of regulation regarding financial derivative exchange agreements. One is inter-bank transactions, which may be regulated by applying the International Swap Derivatives Association's (ISDA) Master Agreement and standard forms. The ISDA terms have been adopted worldwide for years, and provide general legal principles regarding financial derivatives. They protect involved parties against legal holes and ambiguities, as well as transactional risk, operational risk, and counterparty credit risk. The other aspect is transactions between banks and investors; this may be regulated by requiring the responsible competent authority to exercise governance over banks' sales and marketing of financial derivatives, and impose upon banks the responsibilities to recommend suitable products, to maintain transparency, and to ensure that sales personnel properly disclose relevant information. Through these aspects, this thesis discusses means for financial derivatives to achieve their intended utilities, while offering ways to prevent their potential adversities.
This thesis introduces the concept of financial derivatives, discusses the cause and effect of the subprime mortgage crisis, and examines the ISDA Master Agreement and the legal relationship between investors, issuers and sellers. By collecting and analyzing related documents and information, it attempts to take on various perspectives surrounding the matters at hand, and to derive a core understanding of the issue.
In discussing financial derivatives, this thesis seeks to understand their basic structures and principles. For that purpose, it is necessary to examine the practical operations and applicable legal systems of the financial derivatives markets in United States, Japan and the European Union. Legal matters that may be encountered in those markets are identified, and a comparative analysis approach is taken to highlight differences in related legislations in Taiwan. Through this, it is hoped that inadequacies in Taiwan's financial derivatives regulation may be rectified.
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