The author once represented the contract dispute case of gold futures trading, and combined with his own experience, expressed some views on the crude oil treasure puncture incident.
The author believes that the responsibility in this incident mainly considers the following aspects: First, whether the transaction time and settlement price of warehouse moving comply with the contract, legal provisions and trading practices; Second, whether there is fault and the degree of fault in BOC's non-compulsory liquidation; Third, in the absence of clear agreement, the warehouse's loss liability will bear legal problems; Fourthly, whether China Bank's risk control measures are in compliance and whether it has fulfilled its due obligations to investors.
You know? Original treasure oil? Bank of China launched 20 18 1? Crude oil treasure products: According to official website of China Bank, crude oil treasure refers to the trading products linked to domestic and foreign crude oil futures contracts issued by China Bank for individual customers, which are divided into American crude oil products and British crude oil products according to different reference objects. Among them, what is the benchmark for US crude oil? WTI crude oil futures contract? What is the benchmark for British crude oil? Brent crude oil futures contract? , and denominated in USD and CNY. As a market maker, Bank of China provides quotations and conducts risk management. Individual customers open corresponding comprehensive margin accounts in China Bank, sign agreements, and deposit the full margin, thus realizing two-way selection of long and short crude oil trading tools.
Linking to futures contracts is similar to futures trading, but it is different. Investors' money to buy crude oil does not directly enter the international crude oil futures exchange for trading, but banks provide trading quotations to investors on the basis of comprehensive consideration of global crude oil market price trends, domestic RMB exchange rate trends, market liquidity and other factors. Investors indirectly invest their funds in the international crude oil market through the role of bank market makers.
2. Is it appropriate to move the warehouse?
Why wait until the last minute to move the warehouse? ? It is one of the biggest doubts of investors.
In May, the WTI contract expired on April 2 1. As a paper crude oil product that does not participate in the spot delivery of crude oil, in order to avoid large price fluctuations on the delivery date, both domestic ICBC and CCB made positions adjustment one week before the contract expires, which is the default rule in the industry, while BOC waited until the last day of the delivery date.
China Bank Financial Market Personal Products Agreement (hereinafter referred to as? Agreement? ) Article 9 Agreement:? When Party A is making crude oil products, it can initiate trading on the contract before the latest trading time on the last trading day of the contract, and modify the maturity date treatment method. When this contract expires, that is, the expiration date of this contract, Party B will handle the expiration in the way specified by Party A ... In other words, the Bank of China moved its location at the last minute and did not violate the agreement. But reason is another matter.
At the same time, it also shows that crude oil treasure has a high degree of freedom in design. For knowledgeable customers, this product has considerable tolerance and provides customers with the largest operating space. For most customers who are inexperienced in futures trading, this high degree of freedom product also contains great risks. This involves whether the bank will give investors a risk warning of trading rules and whether it will fulfill its obligation to screen qualified investors.
3. Question the settlement price
Bank of China terminated the transaction at 22: 00 that night, but WTI settled at 2: 30 a.m. the next day. Investors questioned whether the settlement price was calculated at 22 o'clock or at WTI crude oil settlement price that day.
BOC responded that the settlement price of the contract was announced by BOC, referring to the settlement price of the corresponding futures contract announced by the futures exchange. The futures exchange calculates the settlement price of the day according to the average price from 2: 28 am to 2: 30 am Beijing time.
Let's look at article 9 of the agreement again. The agreed netting settlement and warehouse transfer transactions shall be handled according to the contract settlement price announced by Party B. ..
That is to say, if the customer chooses to hold the contract until the last day, then Bank of China will move the position at the end of trading hours, and the price will be announced by Bank of China. Since the WTI contract in May was executed according to the TAS settlement transaction instruction, the settlement price or a price close to the settlement price is allowed to be used at any time during the transaction. Bank of China takes the final settlement price of the current month's contract as the settlement price.
4. Why didn't you start compulsory liquidation?
The rules of compulsory liquidation are stipulated by law and agreed in the contract. When the conditions of compulsory liquidation are met, banks have both the right and the obligation to carry out compulsory liquidation.
As a trading product without leverage effect, customers need to submit a deposit of 100%. Under this trading mechanism, as long as the crude oil price is not negative, the margin ratio of long positions remains unchanged at 100%, which will not trigger forced liquidation. Once the price falls to a negative value, the margin of the long position is not enough to maintain the margin ratio agreed in the agreement, and the forced liquidation line will be touched. According to article 1 1 of the agreement, the minimum proportion of compulsory liquidation margin is required to be 20%. In the event, the crude oil plummeted to a negative value, reaching the condition of compulsory liquidation. However, after 22 o'clock that night, BOC did not carry out compulsory liquidation.
Bank of China said in the announcement that for crude oil products, long positions will not trigger forced liquidation when the market price is not negative. For those who have been confirmed to enter the warehouse transfer or maturity netting treatment, the settlement price will be used to complete the maturity treatment for customers, and they will no longer focus on the market and be strong. ?
Then, when the compulsory liquidation mechanism conflicts with the trading rules of mobile position settlement agreed in the agreement, what should be done?
The occurrence of extreme oil prices is really unpredictable. If BOC didn't take it into account when designing its products at the beginning, although it made mistakes, it was not too demanding. However, after updating the trading rules and allowing negative oil prices, CME still failed to systematically adjust the possible conflict between the compulsory liquidation mechanism and the agreement. This should be a product design loophole, and it failed to remind investors of this risk in time, which is a dereliction of duty in risk control.
5. The responsibility of warehouse infiltration loss
Article 2 of the agreement stipulates that the funds used by Party A for the transaction are legitimate and are my pure risk funds, and all the loss risks of the funds have been considered and can be borne. ? Bank of China reminds customers that all the trading funds may be lost, but it does not suggest that there will be more serious risks than the loss of principal in the transaction, that is, there may be warehouse losses.
We believe that the responsibility of analyzing and determining the warehouse penetration loss is based on the classification of risks into two categories: transaction risk and operational risk.
Trading risk refers to the risks that investors or traders will face due to their own reasons, such as price fluctuation risk, decision-making error risk and so on. Trading risk comes from objective market fluctuations and investors' own decisions.
Compared with transaction risk, operational risk is the risk of endangering the market and investors due to operational mechanism or human factors in the process of market operation. Operational risks mainly come from policies or trading rules that do not conform to market laws and operating cycles, and also include various behaviors prohibited by laws and regulations in the market.
The legal consequences are different. The trading risk is faced by the investment trader himself, and the losses arising therefrom are borne by him; The loss of operational risk is not necessarily borne by investment traders, but should be identified and judged by analyzing force majeure events and tort.
The Bank of China probably didn't expect WTI oil price to drop to negative value historically. Whether the relevant provisions of extreme cases are fully considered when designing products and whether there is an emergency plan for the conflict of trading rules are all worthy of attention by investors in the follow-up litigation. In any case, for investors, this is a risk other than price fluctuation and investors' misjudgment.
6. Investor suitability and risk control measures
Bank of China once posted on its official WeChat account:? Is there any interesting and profitable product recommendation for Xiaobai who has no professional financial knowledge? Of course there is! That's the crude oil treasure! ?
According to relevant media reports, in the recent 120 questionnaires of crude oil treasure, there are 6 investors who have really touched futures, accounting for only 5%. Investors need to pass the risk test of China Bank before buying crude oil treasure, and the test results focus on balanced and growth investors. Does this result conform to the actual risk of crude oil treasure? As a financial derivative with futures properties, crude oil treasure belongs to one of the products with the highest risk preference, far exceeding the risk level requirements of banks for wealth management customers. Does BOC conduct a high risk assessment for the identification of qualified investors? Do you comply with the investor suitability management regulations? In case of subsequent litigation, Bank of China shall bear the burden of proof for fulfilling the obligation of appropriateness.