On the evening of August 8, a rumor that "a number of fund managers were investigated for illegal OTC options" alarmed the entire fund industry.
The Weibo netizen who originally posted the rumor called it "the biggest scandal in the history of public funds." He said in a post that the incident "involved more than 300 fund managers and locked more than 30 of them."
If these rumors are true, the fund manager participating in OTC options in his own name is suspected of "rat warehouse" trading.
A reporter from Beijing Youth Daily tried to contact the poster to obtain relevant list information, but as of press time, the user has not responded.
So, what exactly is the rumored "over-the-counter option"?
If the fund manager makes OTC options, how does it illegally make profits?
The fund company responded
"The content of the rumours is a bit outrageous"
A reporter from Beiqing Daily asked a number of leading public funds to verify the matter, and all relevant personnel said they had not heard of the matter.
"The content of the rumors is a bit outrageous." A public fund source said, "Because the rumors involve many fund companies, people have been asking about them since the beginning. This rumor has been widely circulated, but a careful analysis will reveal that it is too exaggerated."
This rumor is associated with "over-the-counter options", a brokerage business that is usually less concerned.
So what exactly are OTC options in the whirlpool?
As an emerging business in the securities industry in recent years, OTC options refer to non-standardized financial options contracts conducted in non-centralized trading venues. It is based on the negotiation between the two parties over the counter or the matching of middlemen, and the transaction is formulated according to the needs of both parties. financial derivatives.
On the whole, domestic OTC options can only be participated by institutional and corporate clients.
A public fund practitioner told the Beiqing Daily reporter that public fund managers cannot participate in over-the-counter options.
Whether it is the regulatory authority or the fund company, the fund managers are strictly required and must not be touched. The identity information and investment accounts of their own and their relatives are closely monitored.
"Once it is investigated, the cost is too high, and it is difficult to become an excellent fund manager. Most of them are more cherished of their feathers, so the possibility of such a blatant group breaking the law is very small."
OTC options accounts are difficult to check
If the fund manager participates, it is a "rat warehouse"
However, a private equity fund source told the Beiqing Daily reporter that it is difficult to check the OTC option account.
Trading information for options will not be displayed on any public platform.
In the past, fund managers could carry out over-the-counter options business, but because of many "rat warehouse" incidents, the supervision has become very strict on this area.
The gameplay of this rumor existed in the past, "Fund managers should not be so daring now, after all, the technology of supervision is very advanced. You said that more than 300 fund managers participated, I don't believe it.
According to the aforementioned sources, over-the-counter options are linked to A-share stocks. If the fund manager really participates in over-the-counter options, it means that the fund manager first places an order for call options at the brokerage, and then he can use funds to build positions to raise the stock price and realize the stock rise. Over-the-counter options also followed the trend soared.
That is, the fund manager uses the capital advantage in his hand to boost the rise of specific stocks, and then sells the ambush over-the-counter options to achieve profits.
In essence, it is no different from the "rat warehouse".
OTC options suspected of "rat warehouse"
How to profit?
How to understand OTC options trading in general?
According to a securities practitioner, first of all, the operation of over-the-counter options requires the participation of institutional investors.
Secondly, institutional investors need to meet three conditions: first, the net assets at the end of the past year should not be less than 50 million; second, they should have more than 3 years of financial-related investment experience; third, the financial capital at the end of the past year should not be less than 20 million yuan.
Finally, after the conditions are met, the derivatives trading agreement is signed with the brokerage to complete the derivatives transaction, and the order can be placed.
In addition, according to the above-mentioned people, the leverage ratio of OTC individual stock options is generally about 10 times, and the high one can reach 30 times, while the general margin financing and securities lending is about 2 times the leverage.
Take 10 times leverage as an example: if you invest 100,000 yuan, you can leverage 1 million yuan of funds.
Assuming that the execution price is 10 yuan (buy price), if the price of the underlying asset rises to 11 yuan, it means that 1 million yuan has risen to 1.1 million yuan. If the underlying asset price has risen to 20 yuan, 1 million yuan has risen to 2 million yuan Yuan, which is equivalent to 1 million yuan at a cost of 100,000 yuan. After deducting the cost, the net profit is 900,000 yuan.
"As long as the underlying asset is greater than 11 yuan, it is a profit; between 10 and 11 yuan, there is a loss but not all the premium; if it is less than 10 yuan, there is no need to exercise the option, which means that 100,000 is lost. Therefore, if you can find a target that will rise deterministically within a certain period of time, then, through the game of over-the-counter options, it can have a great amplification effect, and this kind of huge profit is very attractive. There are many 'rat positions' in history, There's a small group of people who have the pricing power of some of the targets, and that's how they play."
Memory
Over-the-counter options business is developing rapidly, regulation is tightening, and orderly expansion is advocated
According to media reports, in recent years, my country's OTC derivatives market has shown the characteristics of rapid growth in scale.
According to the data disclosed by the China Securities Association, as of the end of 2021, the initial nominal principal size of the OTC derivatives market was 2,016.717 billion yuan, with a cumulative increase of 8,403.801 billion yuan throughout the year, a year-on-year increase of 76.56%.
Among them, the nominal principal size of the stock of OTC options was 990.65 billion yuan, with a cumulative increase of 3,631.066 billion yuan throughout the year, a year-on-year increase of 39.41%.
According to the China Securities Association, in 2021, the top 20 securities companies in the net income of OTC options business will have a combined revenue of 11.2 billion yuan, a year-on-year increase of 59.46%.
Among them, the business income of CITIC Securities, Shenwan Hongyuan and Huatai Securities was higher, with 1.942 billion yuan, 1.891 billion yuan and 1.474 billion yuan respectively.
In terms of revenue growth, Guolian Securities and Galaxy Securities grew faster, up 5802.73% and 1947.78% year-on-year.
On August 5, the China Securities Association just released the latest list of OTC options dealers. A total of 8 securities dealers are primary dealers and 36 securities dealers are secondary dealers. 44.
Guotai Junan believes that by the end of 2021, the nominal principal of over-the-counter options has exceeded 2 trillion yuan, and the refinement of regulatory policies and the implementation of standardized measures will help the market focus on orderly expansion and standardized development.
It is worth noting that on June 2 this year, the China Securities Regulatory Commission disclosed three announcements of administrative supervision measures, all of which involved OTC options business. The three securities firms that were punished were CICC, CSC and Huatai.
The China Securities Regulatory Commission said that CICC took regulatory measures to issue a warning letter because the counterparty to the OTC options contract was a non-professional institutional investor.
China Securities Co., Ltd. has also taken regulatory measures to issue a warning letter because the underlying stock index linked to the OTC option contract exceeds the specified range.
Huatai Securities failed to issue a written compliance opinion for some OTC option contracts with a term of less than 30 days because the individual stocks linked to some OTC option contracts exceeded the scope of current margin financing and securities lending, and the internal system related to the OTC option business was not perfect. , was ordered to make corrections by the CSRC.
This group of articles / reporter Zhu Kaiyun