What Is a Financial Market?

The financial market system refers to the composition of its submarkets. Including money markets and capital markets. The money market includes the inter-bank lending market, the repurchase agreement market, the commercial paper market, the bank acceptance market, the short-term government bond market, and the large denomination transferable certificate market. The capital market includes medium and long-term bank credit markets, securities markets (bond markets, stock markets), insurance markets, and financial leasing markets.

Financial market system

The financial market system refers to the composition of its submarkets. include

The financial market system includes money markets, capital markets,

China has basically formed a financial market system in which currency markets, capital markets, foreign exchange markets, and gold markets coexist.

In a mature financial market system,

To strengthen the construction of a multi-level and diversified market development system

It is necessary to strengthen the construction of a multi-layered and diversified market development system and coordinate the development of these markets. The financial market is a collection concept with a wide range of content and layers. A multi-level and diversified financial market system is reflected in multiple aspects in accordance with different classification standards. Since the reform and opening up, the role of resource allocation in China's financial market has continued to increase. China's financial futures market will also develop rapidly. One of the main problems in the development of domestic financial markets is structural imbalances. The direct financing ratio is too low, the investment and financing entities in the market have structural defects, and the development of various financial markets and submarkets is uneven. Cross-market investment and financing and trading tools are not enough, and the linkage development mechanism between the markets has not been effectively established, causing distortions in prices of some financial products and poor flow of funds, which cannot effectively meet the diversified needs of investment and financing entities, and are not conducive to market risks. Management. Therefore, it is necessary to strengthen the research on the development of market linkages, encourage and support the innovation of cross-market trading tools, and establish and accelerate the improvement of a joint coordination mechanism for cross-market risk supervision and risk disposal. The central bank and market supervision departments should maintain coordination of policies, pay attention to the strength and progress of reform, innovation and opening up in each market, strive to maintain coordinated development of each market, and promote the financial basic product market and derivatives market, currency product market and capital product market, and foreign currency products. The market and the local currency product market develop in a coordinated manner to improve the market's resource allocation and investment and financing efficiency. ^[4]

Orderly promote the integration of domestic financial markets into international markets

It is necessary to promote the integration of domestic financial markets into the international market in an orderly manner, proactively prevent the transmission of risks in international financial markets, and share investment and financing opportunities in international financial markets. With the increase of the degree of internationalization of China's economy and the increasingly close connection between domestic and international markets, China's financial market and the international financial market have begun to form a certain degree of linkage, and the price trend of some financial products is close to the international market. However, the international market share of China's financial market is still limited.

Therefore, it is necessary to continue to enhance the external service capabilities and attractiveness of domestic financial markets, further strengthen the connection between domestic financial markets and international financial markets, and strive to build China's financial market into a country that has the ability to provide financial transaction services to the outside world, with participation of domestic and foreign participants Markets with certain international or regional influence. After the conditions are mature, the scope of foreign participants in the domestic financial market should be gradually expanded. Practice has proved that as long as management is in place, appropriately expanding the participation of foreign participants in China's financial market is conducive to the activeness of domestic financial markets and strengthens the connection between domestic and foreign financial markets without causing normal operation of domestic financial markets. Massive impact. With the steady advancement of fully convertible capital accounts, the scope for other overseas enterprises and financial institutions to participate in domestic financial markets has gradually expanded. Encourage large-scale domestic financial institutions to achieve international operations and better play the role of important domestic market participants in connecting domestic and international financial markets. Encourage domestic financial institutions and enterprises to participate more actively in international financial markets, and encourage them to become the main linkers of domestic and international market financial markets. However, the opening of the financial market to the outside world should be active, stable, orderly, and stable. While opening up, it should continue to accumulate experience in domestic and foreign market risk management and supervision to prevent the impact and impact of international financial markets on the country and maintain the stability of the domestic market.

To build a market information disclosure mechanism with high integrity

It is necessary to build a highly credible market information disclosure mechanism and create a fair, transparent and credible investment and financing environment for investors. Information disclosure is directly related to changes in the price of financial products, which in turn leads to market income division. Full information disclosure is the basis for rational market investment. Market regulators in all countries have continuously disclosed information as an important measure to protect the legitimate rights and interests of investors, maintain market transparency, fairness and efficiency, and reduce systemic risks.

Regulatory practices in various countries have shown that the strengthening of information disclosure requirements alone cannot prevent fraud driven by benefits. The company's disclosure requirements do not, by themselves, encourage dishonest managers to become loyal. An effective information disclosure system requires both a clear and complete disclosure system and a strong enforcement mechanism to ensure the implementation of the system. In the case of information disclosure at the time of securities issuance, their respective responsibilities shall be stipulated according to the role played by the aforementioned institutions and personnel in information disclosure. Issuers and listed companies are obligated to disclose information, and should bear no fault liability to compensate investors for the losses they have suffered; issuers, directors, supervisors, senior managers, sponsors, and securities service agencies of listed companies should be responsible for faults In principle, it shall bear joint and several liability for compensation with the issuer; if the issuer, controlling shareholder or actual controller of the listed company is at fault, it shall also bear joint and several liability with the issuer.

In addition to the mandatory nature of the system, effective, truthful, and transparent information disclosure also depends on the high integrity and self-discipline of market players to support it. To build a balanced financial market system, social and market integrity must be recast, and adequate information disclosure must be based on a high level of integrity. Improving the integrity of market players also requires systems and conscious awareness of honesty to achieve it. It is necessary to increase the cost of untrustworthy people, establish an effective punishment mechanism for untrustworthy people, and build an effective culture of good faith.

Focus on establishing a system that effectively protects the interests of small and medium investors

We must focus on establishing a system that effectively protects the interests of small and medium investors, which has a bearing on social stability. The opportunities for small and medium investors to participate in financial market transactions are increasing, and the number is increasing. But small and medium investors are at a disadvantage due to the asymmetry of news, power and wealth. At the same time, the interests of the broadest group of small and medium-sized investors are directly related to social stability and are an important part of the construction of a harmonious financial market system. With the listing of China Securities Investor Protection Fund Co., Ltd., it indicates that China's system of protecting small and medium investors in the stock market has entered a new stage. In order to effectively protect the interests of small and medium investors, high attention has been paid to the amendment of the securities law, and key measures for protecting the interests of small and medium investors have been identified. The State established a securities investor protection fund is among them. At the same time, it is also clear that the compulsory escrow of the client's deposit is required. When the securities company liquidates, it should give priority to the debts caused by misappropriation of the client's assets. If insider trading causes losses to investors, the actor should bear the liability for compensation according to law; Companies assume joint and several liability.

However, protecting the interests of small and medium investors is a worldwide topic and problem. To establish a long-term mechanism to protect the interests of small and medium investors, in addition to using laws and regulations as a basic system, governing the city according to law, and monitoring according to law, all departments must work together . Not only does the decision maker's determination be required, but also the hasty nature of certain policies must be avoided and the coherence of policies introduced. The introduction of any policy measures must fully consider the affordability of the majority of small and medium investors and maintain market stability. Listed companies are the cornerstone of the securities market. We must keep the interests of shareholders in mind and strive to improve returns to shareholders. It is impossible for small and medium shareholders to directly participate in the management of the company. Therefore, it is very important to continuously improve the corporate governance structure for protecting the interests of small and medium shareholders. It is necessary to strive to reflect and protect the rights and interests of small and medium shareholders. At the same time, relevant departments should strengthen the management and cleanup of market intermediaries, and investors who are misled by stock appraisals must also be compensated according to law. In order to protect the interests of investors, the conduct of stock information dissemination through the media needs to be regulated. Anyone who publishes false securities news through the media misleads investors and causes investors to suffer losses shall also bear civil liability for compensation.

To establish an effective market risk and operational risk management mechanism

Institutional market entities need to establish effective market risk and operational risk management mechanisms to control market risks within their own tolerance. Each regulatory agency has issued corresponding market risk management guidelines, issued management documents and other measures for internal control evaluation, and relevant market trading platforms also pay attention to market risk tips to help market entities increase their risk awareness and improve their risk management capabilities. These are important measures to maintain the stable development of the market. At the same time, various institutional market entities have established corresponding risk management systems, adjusted business and risk management processes, and enriched personnel and technical support. However, in general, there is still a large gap with the requirements of China's financial market reform, innovation and development situation.

In order to effectively manage market risks, in addition to continuing to improve the relevant system, the key depends on how market entities implement relevant risk management guidelines and their own risk management systems, and the key depends on whether senior management attaches importance to it. The senior management of the institution shall carefully determine the relevant risk management strategies and policies, determine the level of market risk that they can bear, and guide the risk management department and market trading department to establish scientific risk management procedures. Starting from the senior level of the organization and implementing a good market risk management culture from top to bottom are the most critical factors for effective risk prevention. Because high-level behavior and value orientation directly affect the formation of risk management culture in various business lines and business departments. At the same time, we must pay attention to the role of internal audit and compliance departments, make the existing system implementation in place, and strengthen the implementation of the system. Attention should be paid to the construction of talent teams, especially the reserve and training of market professionals, which is a key factor to effectively improve their market trading and risk management capabilities.

Attaching importance to the ecological environment construction of financial markets

We must attach importance to the construction of the ecological environment of the financial market, and create conditions for safe, fair and efficient operation of the market. The financial ecological environment refers to the external environment and basic conditions that affect the operation of financial markets, and is an essential element for the development of financial markets. The financial ecological environment includes legal system environment, public risk awareness, intermediary service system, market credit system, and administrative management system. To vigorously improve the financial ecological environment, we must start from the aspects of transforming the micro foundation of the financial market, improving the legal environment of the financial market, improving the credit system of the financial market, standardizing and improving the financial market intermediary service system, and improving the financial market supervision and management system.

Regarding the participants in the financial market, we should vigorously promote the marketization and diversification of demand of participating actors, cultivate institutional investors, and make the channels for individual investors to enter the financial market through various methods more smooth. In addition, we must create conditions for the compliance investment operation of collective funds such as enterprise annuities, social security funds, and housing provident funds. We must continue to improve the legal and institutional environment for financial markets. It is necessary to improve laws and regulations to protect the legitimate rights and interests of investors, lenders and other financial market participants, and maintain normal market order. Establish a sound and unified financial market rules and regulations, including accounting, auditing, taxation and information disclosure systems, to ensure market fairness and improve market transparency. In particular, the integrity of intermediary service agencies such as accounting firms, law firms, and credit rating agencies should be strengthened, and the team of pure market intermediaries should be strengthened. ^[4]