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This thesis aims at studying the sales and risk control on currency derivative securities performed by financial organization based on customer’s demand and business diversification. In recent years, due to the gradual reduction in interest rate between the deposit and loan, many financial organizations start to use the sales of currency derivative securities, which needs only small capital, to increase revenue; moreover, along with the aggressive and open attitude from government, the currency derivative securities market thus becomes booming.
Currency derivative securities is based on high leverage operation, its operation only needs small amount of deposit or premium or the application of credit line of currency derivative securities at financial organization, it has much higher trading risk than foreign cash sales. Besides, most of the domestic currency derivative securities deals are at the over-the-counter market, for example, forward contract, currency forward contract, swap contract, etc., since it is highly free operation, the trading content can be customerized according to trading partner’s demand; therefore, risk control is very important when performing currency derivative securities at over-the-counter market of financial organization.
Case study on currency derivative securities in this study, company profile and structure will be reviewed first, then the trading process will be further understood to see how it operates, furthermore, the category of financial products sold by financial organization will be further introduced, and finally improvement suggestions will be provided for the current implemented risk control policy. We find from the case study that before import or export company performs currency derivative securities operation at the financial organization, the sales department in the company will apply for a credit line for the operation of currency derivative securities, the credit line will be used as deposit or premium, however, this action will bring higher risk to the financial organization. Besides, when import or export company performs currency derivative securities trading, the credit lint authorized by the financial organization will be used to replace deposit or premium, it’s formally an accreditation behavior without doubt but the credit line does not have to be reported to the Joint Credit Information Center according to normal accreditation procedures, this action will lead to the credit expansion of the import or export company, which in turn is a potential risk to the financial organization. This study will suggest the authority organization to refer to the current accreditation procedures for financial organization, that is, when financial organization receives the application from import or export company for the operation of currency derivative securities, it should be reported to Joint Credit Information Center for the decision of a credit line, this is to facilitate the risk management in the financial organization.
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