Evolutionary Games in Regulations of OTC Derivatives Market

The OTC derivatives market is widely criticized in the financial crisis. The lack of government regulation is considered one of the fundamental causes of disastrous consequences. Under the conditions of limited rationality and the framework of evolutionary games, the paper studies strategies selection, the evolution of the trajectory and impact factors between the market traders and government regulators. And it finds that the replicator dynamic system has five partial equilibrium points and tends to the different equilibrium point in the different cases. Finally, based on the conclusions of the model, it makes suggestions for efficiency improvement of the OTC derivatives market regulation in China.