Crude Oil Treasury Tracking ｜ Finance Commission said to respect the contract and clarify responsibilities, what signal did it reveal
More than ten days after the crude oil treasury incident occurred, the country ’s highest financial management agency put forward “to attach great importance to the risk of some financial products caused by current fluctuations in international commodity market prices”.
On May 4, the Finance Committee of the State Council held the 28th meeting. The meeting pointed out that it is necessary to attach great importance to the risks of some financial products caused by the current price fluctuations in the international commodity market, raise risk awareness, and strengthen risk control. It is necessary to control spillovers, grasp moderation, improve professionalism, respect contracts, clarify responsibilities, and protect the legitimate interests of investors.
The above statement of the Finance Committee seems to correspond to the recent incident of the Bank of China's crude oil treasure trade.
In the early hours of April 21st, the US WTI crude oil futures May contract fell out of the first negative settlement price in history-$ 37.63. Affected by it, the Bank of China Crude Oil US crude oil May contract "crossed positions": investors not only lost their money, but also owed the bank 1-2 times the money. Since then, a large number of investors have defended their rights and asked the Bank of China for an explanation. According to Caixin reports, Bank of China crude oil treasure has more than 60,000 customers, and the overall loss caused by the position-crossing incident is not less than 9 billion yuan.
Since the occurrence of the Bank of China Crude Oil Baocang incident, Bank of China, China Construction Bank, Bank of Communications, Industrial and Commercial Bank of China and other state-owned large banks have suspended new paper trading of “paper crude oil”. In addition, ICBC, China Construction Bank and other banks have also suspended Open trading of "paper commodities" other than "paper crude".
What does overflow, moderation, and professionalism mean?
At this meeting of the Finance Committee, what is meant by "controlling spillover, grasping appropriateness, and improving professionalism"?
A futures practitioner analyzed to Surging News that controlling spillovers may refer to "financial derivatives belong to financial derivatives. They cannot be compensated because of financial derivatives, which can lead to the spread of other industries and cannot affect other banks, or from banks. Extend to the real economy. "
Zhou Yiqin, deputy dean of the Legal Inquiry Financial Supervision Institute, said that spillover refers to the spillover effect of the international oil price drop on the domestic economy, and generally refers to the external derivative effect on the internal.
Yang Zhaoquan, director of Beijing Weinuo Law Firm, said: "It is urgent for domestic financial institutions to attach importance to risk spillovers in international financial markets. To control spillover risks, we must control product risks, pay attention to the appropriateness of product risks, and suspend high-risk products. High-risk products linked to the international futures market, such as crude oil rights, should be stopped from sale. "
In addition, Zhou Yiqin believes that grasping moderation should mean that the product recommendation to investors should be moderate, and products that exceed the investor's risk tolerance cannot be blindly promoted. The improvement of professionalism should refer to the lack of professionalism of BOC in this incident, which in turn leads to risky incidents.
Previously, among the product design loopholes cited by investors, the issue of suitability was one of the most questioned.
Some investors revealed that the Bank of China crude oil treasure started selling at only 1 barrel. Another investor believes that the Bank ’s promotion of crude oil products violates the principle of appropriate matching, that is, to sell products that do not match their risk-taking ability to investors, which is a very serious compliance issue in the industry.
Should Bank of China bear the losses and how much?
This meeting of the Finance Committee proposed "respecting contracts, clarifying responsibilities, and protecting the legitimate interests of investors." Zhou Yiqin said that combining the three sentences or showing that the eventual disposal plan of this incident still has to respect the product contract, each party bears its own due responsibilities, is impartial, but the general direction is to protect financial consumers.
Yang Zhaoquan believes that this meeting has brought a favorable external environment to the protection of crude oil investors' rights. "Respecting the contract, clarifying responsibilities, and protecting the legitimate rights and interests of investors" means that the country recognizes that the Bank of China is responsible for the investor's damage. Both parties should bear the losses caused by the responsible party on the basis of clarifying responsibilities.
Zhao Zhidong, a senior partner of Shanggong Law Firm, believes that the content of the meeting means that according to the contract, if there is a contract, the legal deduction is legal. But whether to continue to require investors to fulfill their repayment obligations, then it may be determined by the court in accordance with the agreement signed by both parties, to determine the rights and interests of the two parties, and then protect the legitimate rights and interests of all parties.
However, the above-mentioned futures practitioners said that if everything in the Bank of China is legal and compliant, it is impossible for customers to demand compensation.
BOC responded three times, and its attitude gradually changed
In response to the ups and downs caused by the crude oil treasure trade, the Bank of China has made three responses so far.
On the evening of April 22, Bank of China issued the "Notes on Crude Oil Bao's Business Situation", and responded for the first time to the incident of Crude Oil Bao's warehouse penetration. In this response, Bank of China discussed a total of 5 articles, explaining the terms of crude oil products, expiration processing, contract settlement price, WTI crude oil futures contract processing in May, and forced liquidation. To the disappointment of investors, the Bank of China's response did not explain the issues such as product design flaws and risk control failures that investors care about.
On the evening of April 24, Bank of China issued the "Notes on the" Crude Oil "product situation for the first time, and on the evening of April 29 the" Notes on the "Crude Oil treasure" product situation. "
In the latter two explanations, Bank of China ’s response to customer losses ranged from “deeply disturbed” to “empathy”, and its position on Crude Oil products ranged from “full review of product design, risk management and control links and processes” to “full review. Links and processes such as product design, business strategy, and risk management and control, in-depth search for existing problems and hidden dangers, and the addition of "in accordance with the principles of rule of law, marketization, and seeking truth from facts, objective and fairness" in the solution, BOC is actively researching And strive to come up with an opinion in response to the reasonable demands of customers as soon as possible, "WTI May contract negative settlement price issues said" have entrusted a lawyer to formally send a letter to CME ", but in terms of whether to assume responsibility has not changed, that is," in the legal framework Undertaking should be responsible ".
In addition, the regulatory authorities also made a statement before the meeting of the Finance Committee.
The head of the relevant department of the China Banking and Insurance Regulatory Commission said on April 30 that recently, the Bank of China's "Crude Oil" product investment has suffered large losses, causing widespread concern in the market and public opinion. The China Banking Regulatory Commission has paid close attention to this risk event and immediately requested the Bank of China to solve the problem in accordance with laws and regulations, negotiate with customers on an equal footing, respond to concerns in a timely manner, and effectively protect the legitimate rights and interests of investors. At the same time, the Bank of China is required to sort out and clarify the problems as soon as possible, to strictly control product management, strengthen risk management and control, and enhance emergency management capabilities under abnormal market fluctuations. At present, the relevant situation is under further investigation.
Intern Ye Yinghe Reporter Zheng Ge