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Faced with the historic “negative oil price” in the United States, retail investors in the Bank of China “crude oil treasure” (protection of rights) are not the only victims.
According to news reports, large numbers of investors in India and South Korea suffered huge losses as a result.Although Interactive Broker, the largest stockbroker in the USA. The US, shifted its position a few days earlier, also faced a temporary loss of $ 88 million due to insufficient margin on the customer’s account.
Text / Sina Finance Wei Tianchen
Another big loser in the collapse of oil prices are America’s crude oil producers, including Harold Hamm, the founder of President Trump’s ally, Continental Resources Inc.
Continental Resources is pressuring regulators (the United States Commodity Futures Trading Commission, CFTC) and the Chicago Mercantile Exchange (CME) to investigate the reasons behind the unprecedented drop in futures prices for the United States crude oil this week. You suspect there is market manipulation or system failure behavior.
Hamm’s announcement letter stated that Continental Resources also filed a lawsuit against CME.
CME Group issued a notification letter on April 8 stating that the price of major energy products may be negative, and a test announcement was issued on April 15, stating that all CME trading and clearing systems will have prices zero or negative. Continue normal operation.
In the April 15 announcement, CME reminded the main message that the price of the product may be negative in the title and the first sentence. In the April 8 announcement, CME stated that when crude oil futures prices fell below $ 8 a barrel, the compensation system would be converted from the original Whaley price model to the Bachelier price model.
In general, the default condition of the option pricing model is that the futures price is greater than or equal to 0. If the price is less than 0, the option cannot be evaluated through the Whaley model. CME believes that when the price of crude oil futures falls below a certain level, there is a risk of falling below zero, so it decided to change the price model in this case and to be able to set prices when the price of oil crude is negative.
Hamm said in the open letter that after the announcement on the 8th and 15th, CME reiterated the possibility that crude oil will be negative on the morning of April 20. After that, crude oil futures in May fell rapidly and trade volume increased sharply. In the 22 minutes leading up to the end of the afternoon, it went from positive to negative, and the lowest fell to almost -40 US dollars.
Based on the above situation, Hamm believes that this abnormal price fluctuation reflects the possibility that CME is manipulating the market, or that the system is flawed after CME switches to the new pricing model.
CME immediately dismissed this Hamm complaint, claiming that the huge fluctuations in crude oil futures prices were caused by the imbalance between supply and demand of physical crude oil caused by the global outbreak of the New Crown Epidemic, and it was not market manipulation or system failure.
Terence Duffy, CME President and CEO, told CNBC: “Two weeks before announcing that we allow negative price trading, we began to cooperate with government regulators. We must take steps to ensure that market prices reflect basic product concepts. ” Cara “and expressed his willingness to cooperate with the relevant investigations.
CFTC President Heath Tarbert also expressed the same opinion on Tuesday, arguing that the “black swan” incident was caused mainly by fundamental supply and demand problems, not financial market problems.
Terence Duffy also emphasized that CME Group’s target clients are not retail investors, but professional institutional investors.
A practicing attorney in New York, USA, told Sina Finance that, as far as current information is concerned, CME has no obvious breach of duty, especially given the relatively mature development of the futures trading market. Commodity, which has a long history and clear rules. This is a high risk investment product. This “negative oil price” is more like an investment failure in an extreme environment than a market manipulation or a system failure.
However, for the Bank of China, Crude Oil’s main sales target is retail investors, and there is no evidence that BOC has revealed new risks for Crude Oil customers after the CME issued a warning.
Therefore, the aforementioned lawyers stated that ordinary investors initiated a lawsuit against the Bank of China that is well founded.
On the second day of the “negative oil price,” the price of US WTI crude oil futures has recovered to a positive range and has now risen to around $ 17 a barrel, returning to the price before the drop. .
