Abstract: The financial crisis caused by the U.S. subprime mortgage market has evolved into a global financial storm in a short period. The financial crisis is undoubtedly the result of the interaction of financial regulation, excessive financial innovation and other problems. Based on the risk transmission mechanism of financial derivatives in the subprime mortgage crisis, this study discusses a series of problems caused by the complexity of the subprime mortgage product chain and mortgage securitization. Some proposals to the development of Chinese financial derivatives market are put forward as well.

Key words: subprime crisis, financial derivatives, moral hazard, information asymmetry, securitization