On April 23, Bank of China, which fell more than 2% at the opening, ended with a drop of 1.98%, significantly underperforming the market. It was also among the top losers in the banking sector and was the only one of the six major banks to fall more than 1%.
The decline in the share price of Bank of China may be related to its recent involvement in the "Crude Oil Treasure" incident.
html On April 22, an investor who purchased the Bank of China Crude Oil Treasure product broke the news. He received a text message from the Bank of China early in the morning saying: After careful confirmation by the Bank of China, on April 20, U.S. time, the official CME settlement price of the WTI crude oil May futures contract was -37.63 US dollars. /barrel is the effective price. The U.S. crude oil contract of the BOC Crude Oil Treasure product has been netted or moved with reference to the CME official settlement price. Customers with long positions are requested to make up the delivery payment in a timely manner based on the profit and loss of closing positions.What makes investors jump is this sentence: "Customers with long positions are requested to make up the delivery payment in a timely manner based on the profit and loss of closing positions." This means that some investors not only lost all their principal, but also "owed" Bank of China a sum of money.
Public opinion was in an uproar for a while! There are different opinions in the market: there are accusations from investors and different analyzes from experts. On the evening of the 22nd, Bank of China, one of the “protagonists” of the incident, issued a statement on this.
However, public opinion is still fermenting... Everyone is arguing: Is it the investors' fault? Or is it BOC’s fault?
China Securities Journal interviewed a number of "witnesses" of the incident and senior industry insiders, striving to reveal the ins and outs of the incident, right and wrong.
Focus 1:
What exactly is "Crude Oil Treasure"?
This is how the official website of Bank of China introduces "Crude Oil Treasure" -
Source: Bank of China's official website
Mr. Y, a senior futures expert, explained that "Crude Oil Treasure" is a two-way trading mechanism that can be bought or sold. The Bank of China does not have the function of an exchange, so a large number of long and short transactions will be packaged by the Bank of China, and the net risk positions will be taken to overseas exchanges. For example, if you buy 10 million crude oil treasure, Bank of China will go to the CME exchange to open a crude oil futures position equivalent to 10 million.
Chang Qing, a professor at the School of Economics and Management at China Agricultural University and one of the founders of China's futures market, told China Securities Journal that for crude oil products, banks actually took a detour and pooled retail investors' money to do futures abroad. Although Bank of China deals in spot goods in the delivery month, it is actually one month in futures.
Bank of China has also introduced the characteristics of this product.
Source: Bank of China official website
Focus 2:
Why does "underpayment" occur? Does Bank of China have the right to pursue compensation?
Not only investors were shocked by Bank of China's similar "arrears" text messages, but many bank investors also called this a "long-lasting experience."
An investor from a major bank said that in the past, investments would only lose principal at most, because everyone’s default asset price was 0. Although there is a form of margin in the futures market, the margin will only be used up at best. This time the asset value has directly turned negative, and the loss may be infinite.
public account "Qin Xiaoming" explained: "Due to the high storage cost of crude oil, if you buy it for delivery, it will cost huge transaction costs to receive the goods. This transaction cost includes storage and transportation costs as well as the cost of your delivery. The cost of environmental fines if it is lost. Negative prices are the reflection of these costs. "
Regarding the issue of recovery, Article 14 of the "Personal Account Commodity Business Transaction Agreement of Bank of China Co., Ltd." is clear about the bank's right of recourse. Regulations:
"When the customer's special transaction account is overdrawn or has insufficient funds due to various reasons, the customer has the obligation to replenish the funds in a timely manner. The customer agrees that the bank has the right to temporarily freeze its contracted account, and the customer should make up the funds within the time notified by the bank. The funds in the trading account. "
Therefore, some analysts believe that the recovery is in compliance with regulations. Mr. Y believes: “Investing in crude oil treasure is like investing in futures. Since futures trading is involved, there will inevitably be a margin call. If Bank of China crosses its position on an overseas exchange, it has the right to recover from investors."
Focus 3:
Why are so many people pouring into the Bank of China crude oil long position?
According to the explanation of many market participants, the impact of the epidemic on demand and the oil price war have caused oil prices to continue to hit new lows. This is the influx of a large number of investors into "paper crude oil" "The background of the market. At the same time, there is a lack of domestic crude oil investment tools suitable for ordinary investors. Bank "paper crude oil" investment is the main choice in addition to stocks and futures products, and is well known to many investors.
Investor Mr. T told Mr. CSI, he has been engaged in investing for a long time and has traded stocks, futures, gold and Bitcoin. Generally speaking, he has made profits and losses. He has also been paying attention to the trend of crude oil. “Although the epidemic has an impact on demand, after all, it is natural. Resources should be used less and less, and prices cannot be kept low. Therefore, when the international oil price reached US$30, I started thinking about investment methods. "
" is engaged in paper crude oil trading. It was introduced by a friend of mine. He recently made millions, which made me very excited. But I didn’t have much contact with it before, so I just selectively bought a few dozen barrels. Now that I think about it, this decision is really a blessing among misfortunes. As of April 22, my account owed 20,000 yuan. And my friend suffered a huge loss. "Mr. T said.
As for why he chose Bank of China's "Crude Oil Treasure" product, he said that he had compared products such as ICBC, China Construction Bank, and Bank of Communications before, and later felt that Bank of China has the highest degree of internationalization and is the most familiar with the international market.
Focus 4: Why is the delivery so late? Is there any loophole in the system? Mr.
Y said that investors do not understand the nature of the extension of the futures contract and think that they do not need to worry about it if they buy crude oil. In fact, the Bank of China gives investors the right to extend the contract in advance. It’s just that most investors didn’t use it, so they passively rolled over the positions on the last trading day, resulting in a lot of losses.
“Qin Xiaoming” believes that the Bank of China chose to move the position on the last trading day, which was actually docking with NYMEX (New York Mercantile Exchange). The regulations on the last trading day of each month for U.S. crude oil are logically designed to be more seamlessly connected with the international oil price market, allowing investors to fully choose when U.S. crude oil expires. Move positions.
“Other banks moved positions 5 days in advance and seemed to have avoided this huge loss. But what if the market plummets to negative prices on the 6th day to the end? "Some market participants told CSI.com, "From the perspective of short-sellers among investors, such a position transfer may not be a problem. "
Chang Qing said in an interview with China Securities Journal: "Everyone who is familiar with futures trading knows that dealing with varieties with delivery months requires talent support and professional research support. You cannot move the position casually after being linked, which is also caused by its fool trading method. "
But what Chang Qing can't understand is: What is the meaning behind this kind of fool-like trading? "This kind of fool-like trading is no problem in normal times, but it is afraid of extreme market conditions. "
Some futures insiders said that the liquidity of contract transactions near the delivery month is poor, which may lead to risks such as large slippage in closing prices, failure to close positions, and delivery defaults. The Bank of China should have taken this into consideration.
Focus on Five ：
Is there sufficient risk warning?
Bank of China stated that the risks have been warned in the introduction of crude oil products
Source: Bank of China official website
However, since March this year, crude oil prices have fluctuated violently. On April 8, CME Group announced a document on the settlement price adjustment plan, stating that “for WTI crude oil futures in any month, when its settlement price is less than $8/barrel, the settlement price of WTI futures options is calculated. The model will switch from the original model to the Bachelier model.
html On April 15, CME Group issued another test announcement stating that if zero or negative prices occur, all CME’s trading and clearing systems will continue to operate normally, and all regular transactions and Position processing can be executed in liquidation, that is, test preparations have been completed. Mr.Y said: "The Bank of China's lack of consideration in system design is also obvious - it did not consider negative crude oil prices in advance and completely ignored CME's announcement. These risks are not highlighted in advance to investors.When CME modifies the settlement system and changes the axis to positive and negative numbers, you should know that the price of crude oil may be negative. Without futures background knowledge, it will be very painful to touch these things. "
A senior legal person told China Securities Journal that before individual investors participate in the "Crude Oil Treasure" transaction, individual investors need to sign the "Bank of China Co., Ltd. Personal Account Commodity Business Transaction Agreement". The risk disclosure items in the agreement The following stipulates that “personal account commodity trading business requires investors whose risk rating is above balanced and can sign relevant product agreements with banks. "This "balanced" risk rating is far from ordinary people's cognition.
From a legal perspective, this person believes that the following three points need to be paid attention to:
First, the Bank of China is conducting "know your customers" on investors in accordance with regulatory requirements. During the suitability review, whether the risks that investors can bear are truly understood, and whether the questionnaire involved takes into account the situation of making up the delivery payment in addition to the principal loss;
The second is to require investors to have "balanced" risks. Whether the requirement of "making up the delivery payment" is appropriate, such a huge risk of "making up the delivery payment" is obviously not something that balanced investors can bear;
The third is whether the Bank of China has fully realized the complexity and risks of the product in grading the product risk, and how To determine the risk level of the product.
However, investors are not “innocent”.
Mr. Y said: “You must first understand the rules when doing transactions. Leverage itself is not wrong. If you don’t understand the rules, forcefully buy the bottom, and have a large position, you will be targeted. It’s just that this time it happened on an overseas exchange, and Bank of China, as the agent bank, took the blame. In fact, it was the ignorance of individual investors that caused this joke. Of course, the Bank of China is responsible, but the risks were not considered carefully in the design of the system. "
In the media reports on the incident, some Crude Oil Treasure investors also admitted that they did not read the contract carefully and did not study the trading rules.
Focus 6:
Overseas capital harvested Chinese investors? CME had planned it for a long time?
Crude Oil Treasure incident Some people pointed out that CME changed the rules at will (allowing negative prices) and did not give members and customers a buffer period.
In this regard, Chang Qing believed that CME’s move was precisely in response to the flexible adjustment of crude oil and crude oil markets. Unlike other commodities such as copper, it is inconvenient to store and cannot be dumped like milk. If the inventory is not enough, it can only be sold at a discount, which shows that its marketization degree is relatively high
and the US crude oil futures delivery system. The problem of storage capacity is precisely the core of this problem. Industry insiders pointed out that under the narrow storage space, bulls have nowhere to find storage capacity to store crude oil for delivery.
This incident has once again highlighted the shortcomings of the delivery system. The institutional advantages of China's futures market, but domestic investors' desire to buy crude oil in overseas markets, also illustrates the weakening of pricing power and highlights the importance of China's futures market becoming bigger and stronger.
Focus 7: What are the implications for investors? In other words, “If you don’t have background knowledge about unfamiliar financial management or products recommended by banks, don’t buy them. "Mr. Y said.
A person who is engaged in futures investor education told CSI: "We educate investors and tell investors all day long that the market has risks and investment needs to be cautious, but many people turn a deaf ear. Losing money, understood from another level, is the best risk education. Don’t do it if you’re not familiar with it, it’s not an empty statement. "
Some futures people said that after this incident came out, many people who did not know the inside story became more "disloyal" in talking about futures. In fact, it was unprofessional people who did professional things, and the futures tools themselves should not take the blame.
From In terms of product design, some futures people pointed out that crude oil treasure is similar to a long-term futures position, and generally the cost is higher than that of futures companies.
But why can’t futures institutions provide this type of product instead of banks?
Industry insiders said that supervision has always been cautious towards the innovation of futures financial products. Although futures companies have professional capabilities and resources, they are not qualified to do this type of business, and similar futures trading has always lacked unified supervision and is in the "five dragons to control water". " situation.
Chang Qing also believes that there is an element of resource mismatch. "This also serves as a wake-up call to the domestic futures market. The domestic futures market does not have tools that can be flexibly adapted to investors. The majority of retail investors want to share the benefits of price changes, but there are no reliable tools. This kind of fool's trading is very common in China. Professional futures companies can also do this, and they have more experience and strength in research and risk control.”
He believes that from a regulatory perspective, it may be time to adjust the concept to improve services for speculative customers. "Providing this part of liquidity will also help solve the current lack of liquidity problem faced by large companies in hedging."
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Fan benefits are here! Big names like China Asset Management and CITIC Construction Investment came on stage to discuss "who is the real leader of A-shares through the structural market." Follow the WeChat ID of China Securities Journal to get the detailed notice of this event as soon as possible.
Editor: Li Ruoyu Ye Song
➤ "The Crude Oil Treasure product chose to move the position when it expires. Today I was told that not only is the deposit gone, but I also owe the bank hundreds of thousands?"
➤ "I still want to continue to hunt for bargains after the position is moved!" Bank of China Why do crude oil treasure investors "invest cautiously" without huge losses?
➤The official response from Bank of China is here! Why was there no forced liquidation of crude oil before the huge loss?
➤ Being caught by futures, is it feasible to borrow funds to buy crude oil at the bottom? Be sure to understand these two points first
➤Look! Who is the real leader, Taurus vs. Taurus, see you on Sunday night
