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Original title: The Bank of China spoke again about the “Treasury of Crude Oil”, and the suspense remains: how effective is the risk warning? How difficult is it to trade with relevant market institutions?
Bank of chinaThe “crude oil treasure” incident is now the latest progress. On the afternoon of April 24,Bank of china(Hereinafter referred to as “BOC”) once again published on “Crude Oil Treasure”productsDescription of the situation. The Bank of China said: “Bank of chinaI am deeply concerned about the losses suffered by clients who invest in “crude oil” products due to the global spread of the epidemic and the volatile crude oil market. We have been actively listening to everyone’s voices and market concerns.Product designLinks and risk management and control processes, under the legal framework, must assume their responsibilities, work together with clients and do everything possible to protect the legitimate interests of clients. “
In this note, the Bank of China also mentioned that “as of April 6, the Bank of ChinaThe publicOfficial numberWeiboAnd other channels, multiple specific risk warnings were given to “crude oil” customers, and “linking the negative settlement of the May WTI contract with” crude oil “productsPriceRegarding matters, BOC continued to communicate with market-related agencies and negotiated on abnormal market performance on April 20. “And other important information.
The next isBank of chinaFull text of the declaration:
How effective was the Bank of China “Directed Risk Alert”?
Previously, there were many questions about the fact that BOC did not promptly ask customers for risk control. In this sense, the Bank of China stated in the note that this year, the internationalOil priceThe network fluctuates sharply, and investors often trade. Starting April 6, BOC will use SMS, phone, public, official accountWeiboThrough various channels, we have repeatedly provided specific risk warnings to “Crude Oil Bao” customers, especially after April 15, daily risk warnings to customers. April 20 is the current liquidation date for US Crude Oil products. USA, Approximately 46% of BOC clients take the initiative to liquidate and abandon the market, and approximately 54% of BOC clients change their positions or face due gaps (both long and short))
The Bank of China’s statement that it has given customers multiple specific risk warnings before April 20 has been confirmed by some investors. Investor Xiaohe (pseudonym) from Beijing told reporters that he had indeed received 3 or 4 reminder text messages from BOC and also received calls from BOC customer service personnel.
BOC Request SMS Screenshot
However, after receiving the risk warning, Xiaohe still belongs to one of those 54% of customers who “change or expire the settlement process.” “BOC staff also reminded me by phone that 22 o’clock on the 20th is the last trading date. It is recommended that you manually close the position beforehand automatically, otherwise you will face a higher marginWaterI asked him, in addition to changing positions, there is an option for automatic rollovers of maturities. I choose whether maturity reinvestments amount to automatically closing my positions at 10:00 PM on April 20. The other party said yes. “Xiaohe said he thought the price of oil had fallen further, and that there could be some changes before the last trading day. To avoid forgetting the trade or finding a poor system network during the trade, he chose automatic gaps.” 22 o’clock is the deadline for trading. The price of the WTI crude oil futures contract in May shown by the system is approximately $ 11.15 / barrel. I always thought it worked out at this price, which is what I understand from the customer service staff. In fact, however, the final settlement price is based on the price of -37.63 US dollars at dawn. I can’t accept this, “he said.
In an interview with Xinhua Finance on 24, people familiar with the industry said that according to industry practice, CME-related rules and agreements signed with customers, market prices are not the basis for liquidation. Closing or shifting positions will be held in accordance with the official CME settlement price. According to reports by Xinhua Finance, since the launch of BOC crude oil products, it has also referred to the official settlement price of the exchange to settle with clients.
The journalist consulted a copy of “The Investor”Bank of chinaLimited actionsThe companyThe “Individual Products Agreement in the Financial Markets”, Article 9 of the “Agreement”, “Due Liquidation and Position Liquidation”, stated in this way: “When the contract expires, if there is still an outstanding balance in Party A, then Party B The announced contract settlement price will be used for settlement. Party B will refer to the contract settlement price for the current period to close the balance of the Part A contract. “On” Agreement, “the reporter did not see a specific explanation about the settlement price.
“I think the closing price of the position will adjust to the official closing price of CME.ContractIt is not explicitly mentioned, and the customer service staff who spoke to me did not tell me what to resolve. “Xiaohe said.”
ShanghaiTrafficWu Fei, a professor at the University’s Shanghai Advanced School of Finance and director of the Kaiyin Joint Investment Laboratory of the China Institute of Finance at Shanghai Jiaotong University, and researcher Zhang Qian said in an interview with reporters thatBankEmployees or customer service staff at the sub-branch remain investors who purchased the “Crude Oil” product. In fact, most people do not have professional business risk analysis and business capabilities. In this context, risky advice is more about doing due diligence on the behavioral trace. For example, futures and other businessesFinancial managementDifferent products, when futures assets are held for a long timeDividendOr interest, and the cost of ownership is getting higher, and the long-term holding of financial assets is throughDividendORInterest rateIncome If you do not understand some characteristics of the futures business, it is difficult to explain the risks to investors. “In fact, we can look at regular futures companies. They generally think that futures do not belong to Volkswagen Investment Company, so the information required to open an account is cumbersome and complicated, and at the same time, it does not promote products to the public,” Wu Fei and Zhang Qian said.
How difficult is it for the Bank of China to negotiate with relevant institutions on market anomalies?
The Bank of China also stated in its explanation that it continued to contact market-related agencies regarding the issue of the negative settlement price of the May WTI contract linked to the “crude oil” product, and negotiated on the abnormal performance. from the market on April 20. The Bank of China will continue to do everything possible to safeguard the interests of clients and will keep in touch with clients in the future regarding progress.
In reviewing the entire occurrence of the “negative price of oil,” it is inseparable from Chicago that listed the WTI futures.CommodityDoes the Stock Market (CME) have any responsibility for the adjustment of the trading and settlement system in this great loss? The parties are still in dispute.
On April 8, CME stated that it was reprogramming the software to handle the negative price of energy related financial instruments.
On April 15, CME launched the testAdHe claimed that recent market events have increased certain NYMEX energy futures contracts can be traded at negative or zero pricesTransaction settlementAnd the options for these futures contracts can be listed at a negative or zero strike price. If this happens, all trading and clearing systems will continue to function normally.
After 2 a.m. Beijing time on April 21, WTI crude oil futures contract prices in May fell sharply, dropping to an all-time low of around -40 US dollars. CME announced the official settlement price of -37.63 USD / barrel, which became the settlement price of the expiration of the United States crude contract in 2005.
Xinhua Finance quoted industry experts as saying that this price is extreme to extreme and does not rule out the possibility of human manipulation. CME made such a decision is questionable, thinking that BOC may reserve the right to appeal.
Harold Hamm, founder of Continental Resources Inc., is reported to have written to the CME regulator, United States.Commodity futuresThe Commerce Commission (CFTC) asked to investigate whether “possible market manipulation, system failure, or computer programming failure” caused oil prices to drop below zero. The company also filed a similar complaint with market regulator CME.
However, Liu Minglei, head of the business innovation department at the Shanghai Oil and Gas Exchange Center, said it would be difficult for the Bank of China to negotiate with the CME or its brokerage agency, and the exchange is being implemented in accordance with the rules and procedures. He noted that the transaction ownership modification rules were also notified in advance on the market, making it difficult for the exchange to be held accountable by law. Unless the CFTC or the United States Congress feels there is suspicion of price manipulation, they will be investigated by hearing.
Previously, CME President and CEO Terry Duffy said in an interview with the media that he was willing to cooperate with the investigation and said that the market was operating normally. “Two weeks before announcing that we allow negative price trading, we started cooperating with government regulators, so this situation is not a secret to us. But we must take steps so that the market price can reflect the basic concepts of product”. The futures market is working well. “
According to foreign media reports, the United States is investigating whether internal information related to the negotiations between Russia and other oil-producing countries was leaked, which caused crude oil traders.Price fluctuationChina has earned hundreds of millions of dollars in profits. The CFTC will focus on investigating whether the Russia-OPEC alliance strategy was leaked in advance to market participants last month, and will ask if it is informed in advance about Russia’s position in the OPEC + deal. . At the same time, the UK Financial Conduct Authority is also investigating suspected traders in futures contract transactions.
The Bank of China will thoroughly review product design, risk management, etc.
Said in the description,Bank of chinaIt is deeply disturbing for customers to experience losses when investing in “crude oil” products in the circumstances of the global spread of the epidemic and severe fluctuations in the crude oil market. We have been actively listening to everyone’s voices and market concerns, thoroughly reviewing product design, risk management, and control links and processes, assuming due responsibilities under the legal framework, working together with clients and doing everything as much as possible to protect the legitimate interests of customers.
Industry experts believe that for such extreme negative prices, everyone had not expected it before, and the “Black Swan” incident also exposedBankTo investors and other issues, especiallyBankIt is worth reflecting on some of the shortcomings exposed in the proper management of investors. “Are all types of investment products suitable for sale through banking channels?” Suggested some experts. Some investors also told reporters: “BOC treats a crude oil futures product as a financial asset.Sale of productsThat’s wrong? “
The reporter learned from many investors who have invested in BOC’s “crude oil treasure” and “paper crude oil” from other banks that many investors did not have the corresponding experience of investing in crude oil futures at the beginning of investing in the product, nor did they understand some basic concepts. Understand
A Beijing investor told reporters that he had previously purchased products such as “paper gold, paper silver” at the bank. I used to think that “paper crude oil” was also similar to “paper gold.” It’s okay to buy, even if the quilt is short-term. If it’s a big problem, just stick to it and it will always grow back. Increased risk
Xiaohe also told reporters that he started investing in the BOC “Crude Oil Treasury” in March this year. At that time, the international price of oil fell very badly. Friends around him said “it has fallen to cost price and there is a high probability of an increase.” You can provide such investment opportunities. He also confessed to journalists that he had never before been exposed to crude oil futures, and that he did not understand the concepts of “changing positions” and “crossed positions.” “I did a bank risk test before buying this product and passed the risk test, but the risk test did not specifically address some issues for investing in futures or investing in crude oil futures. If there was such content at the time , and I couldn’t pass it, Maybe I won’t consider buying it, “he said.
Risk Test Screenshot
Wu Fei and Zhang Qian said in an interview that, according to public information, the predetermined level of risk of “Crude Oil Treasury” products remains relatively high when designing, indicating that it is possibleLostLosing all the director. But for highly professional options and futures products, it seems that simply testing the level of risk may not be enough.
Wu Fei and Zhang Qian also said that true wealth management is an integral dimension. Understanding the true customer knowledge structure is necessary to design an appropriate asset allocation plan; At the same time, highly professional investment products require highly professional investment consultants.The teamTo manage, at this time, the wealth management institution is becoming the role of an information translator, delivering the correct information to investors. Currently, our financial management institutions have not done enough in this regard, the Shanghai Gao Jin Institute of Advanced Finance-Schwab FinancialThe “New Wealth Wealth Index Report” published in 2019 found that the proportion of wealthy New Chinese who use investment consultants is not high, and 60% of respondents said they would not seek investment consultants and services. The discovery and selection of a professional team of investment consultants will be the long-term development trend of the future wealth management business.
(Editor in charge: DF529)
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