Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 32009
Impact of Regulation on Trading in Financial Derivatives in Europe

Authors: H. Florianová, J. Nešleha


Financial derivatives are considered to be risky investment instruments which could possibly bring another financial crisis. As prevention, European Union and its member states have released new legal acts adjusting this area of law in recent years. There have been several cases in history of capital markets worldwide where it was shown that legislature may affect behavior of subjects on capital markets. In our paper we analyze main events on selected European stock exchanges in order to apply them on three chosen markets - Czech capital market represented by Prague Stock Exchange, German capital market represented by Deutsche Börse and Polish capital market represented by Warsaw Stock Exchange. We follow time series of development of the sum of listed derivatives on these three stock exchanges in order to evaluate popularity of those exchanges. Afterwards we compare newly listed derivatives in relation to the speed of development of these exchanges. We also make a comparison between trends in derivatives and shares development. We explain how a legal regulation may affect situation on capital markets. If the regulation is too strict, potential investors or traders are not willing to undertake it and move to other markets. On the other hand, if the regulation is too vague, trading scandals occur and the market is not reliable from the prospect of potential investors or issuers. We see that making the regulation stricter usually discourages subjects to stay on the market immediately although making the regulation vaguer to interest more subjects is usually much slower process.

Keywords: Capital markets, financial derivatives, investors' behavior, regulation.

Digital Object Identifier (DOI):

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 670


[1] C. Berney. “How to issue covered warrants in London and Paris.” International financial law review, vol. 9, no. 14, 1990.
[2] W. J. Bertin. “Analysis of Australian exchange traded options and warrants.” Journal of Economics and Finance, vol. 34, 2010.
[3] J. Dědič. “Vliv právního prostředí na rozvoj kapitálového trhu.” Conference proceedings 20 let finančních a bankovních reforem v České republice, pp. 71-76, 2009.
[4] K. C. Chen, X. H. Liao. “Expiration effects of covered warrants in China.” The Chinese Economy, vol. 43, no. 6, 2010.
[5] T. Ježek. “Vznik Komise pro cenné papíry.” Conference proceedings 20 let finančních a bankovních reforem v České republice, pp. 77-86, 2009.
[6] A. Nealon. “New warrant rules attract isuuers to Cayman Islands.” International financial review, vol. 18, no. 54, 1999.