The Son of Finance of the Great Age

  Chapter 148 Big liquidation

Regarding the German metal company's self-seeking behavior in the market, the exchange has a default attitude. Although this is not in compliance with the regulations, compared with the credit damage caused by the exchange's default, it can only be two evils. The lesser the right.

   Zhong Shi has gotten used to being woken up by phone calls in the middle of the night, but the content of the conversation this time really surprised him. It turned out that the bulls asked to reach a liquidation agreement to close 50,000 contracts at yesterday’s closing price.

   "Are you sure this is not a violation?" Zhong Shi kept asking on the phone, and he didn't want to get a lawsuit because of it. "In addition, Andrew, is this price still to be discussed? You must know that they must be in urgent need of liquidity now, and the price can be lowered."

  Because German metal is in urgent need of shipments, it is natural to make some price concessions, but it is unlikely that there will be too much pressure, because every drop in the minimum price means a loss of 5.5 million US dollars for German metal. But one good thing is that Deutsche Metal cannot sell all these contracts in a certain day's trading, because it may violate NYMEX's regulation that the daily transaction volume shall not exceed 15% in one direction. Everyone will know that this is a liquidation order for German metals. When the time comes to swarm up, or if the short sellers suppress a few more prices, it will push German metals into the bottomless abyss.

The reality is that German Metal must close these contracts as soon as possible, because once NYMEX requires them to pay double margin, it will be another 50 million US dollars of funds, which is undoubtedly a big deal for German Metal amidst bankruptcy rumors. An expense that simply cannot be afforded.

   "What's the target price?" Andrew pressed on the phone, the price is not up to him.

Zhong Shi thought for a while, and gave a figure that surprised even Andrew: "Just $15.50. How long will it take if we don't take advantage of the fire? I believe they will find such a big liquidation opponent in the market soon." Easy, if they are unwilling, then we will continue to close positions in the market step by step according to the original plan."

Andrew, who received Zhongshi's order, began to contact the other party, naturally using the identity of the agent of offshore companies such as Skyline International Holdings and Skyline Financial Co., Ltd. parted ways.

On December 2, under the rumors that German metals were deeply in bankruptcy, NYMEX started a day of trading. As soon as the market opened, it swallowed all the gains accumulated by the bulls in the previous two trading days. The December crude oil contract opened at $15.99, although On this day, the bulls fought desperately, but still could not change the downward trend. On this day, the crude oil contract finally closed at $15.63, a drop of 2.89%.

   This price is almost the same as the target price given by Zhongshi. On this day, NYMEX’s contract positions increased again, reaching 455,000 lots, an increase of 15,000 lots from the previous trading day.

   These data are very ordinary. If there is no news that German Metal is about to go bankrupt, it will be an ordinary trading day at most. However, under special circumstances, this kind of method is to force the long capital chain to be tense and even have the possibility of cornering positions, which may further force the price of crude oil futures to fall, and even threaten the credit of the exchange to some extent. Therefore, when the market closes on this day Finally, people from German metal came to Andrew again.

  Andrew is a very good agent. He insisted on the set price, no matter how soft and hard the German metal team was, he still insisted on the price of 15.50 US dollars.

  The most anxious thing at this time is not the German metal as a bull, nor the Skyline series company as the main short seller, but the New York Mercantile Exchange. Because once the crude oil futures contract defaults, it will deal a fatal blow to NYMEX's dominance in the crude oil futures market. At that time, the London exchange IPE will wait for the opportunity to rise and win the pricing power in this field. You must know that in London But I have been eyeing this species for a long time.

Zhong Shi, who was anxiously waiting for the news, unexpectedly received a call from the Private Banking Department of HSBC. The call turned out to be Linda from the United States. German metal is flat copper contract in the market, I wonder if you are interested?"

   "Copper? Why, do they also make copper?" Zhong Shi asked strangely.

"Yes!" Linda on the phone was stunned, and then quickly explained, "Deutsche Metal not only trades copper in the LME, but is also a clearing member of the LME. The LME maintains a British-style exchange system, with no more than ten members. Several, even a well-known investment bank like Goodman & Co. can't become their member!"

   "Your news is very useful!" Zhong Shi praised, but then he changed the subject and politely refused, "As for Tong, my team is not familiar with it, so let's forget about it."

"Mr. Zhong, according to our information, German metals are shorting the LME market. I believe that entering the market during this period of time can make a lot of money!" Linda on the phone was a little anxious. This is almost public information on the market. As long as institutions with a little capital will run to take a bite of German metal, how can private bank employees who are investment consultants miss the opportunity to recommend this investment to customers!

   As for what kind of heart they have behind their backs, Zhong Shi is hard to determine. I believe they have heard the news, and the commodity funds or self-operated businesses of these consortiums also know about it. As for whether they will set traps or something in it, it is unknown. You must know that London’s supervision over market manipulation is far inferior to that of its American counterparts. Even later, when Tainan Binzhong’s incident came to light, it was because he manipulated the price of copper in the American market at first, and finally London was forced by the United States. agreed to the investigation.

   "Linda, are you talking too much? Is it misleading?" Zhong Shi changed his voice and asked coldly. For this smart woman, if Zhong Shi hadn't seen the great help he had given him when he first arrived in the United States, he might have asked HSBC's private banking department to change a staff member now.

  Hearing the dissatisfaction in Zhong Shi's words, Linda didn't dare to say anything more, and after a few more pleasantries, she hung up the phone unwillingly.

After hanging up Linda's phone call, Zhong Shi began to think about investment products after withdrawing from the oil market. Although crude oil futures are the first to bear the brunt, the negotiation with German Metal is basically a certainty, and the rest is time question. What confuses him is that in the memory of later generations, there are not many memories about 1994, except for two major events that will shock the global market.

   "Is it really necessary to enter the copper market to test the depth of the water?" Zhong Shi, who was thinking about it and couldn't think of a good investment direction, wondered to himself. What he didn't know was that in the next year, several extraordinary things would happen in the world's financial market, especially the copper market that Linda just mentioned. Just like that, in a daze, Zhong Shi fell asleep again.

  In New York, Deutsche Metal’s negotiating team met with Andrew again. This time it was a formal meeting. Even Andrew hired a lawyer who is proficient in capital market operations.

   "$15.50, this is the bottom line. If you don't agree, you can find other short positions to close your positions." Andrew said righteously. He is extremely thick-skinned to say that taking advantage of the fire is so noble and righteous.

The person in charge of negotiating with German Metal is a white man in his thirties named Schuber, a German-American, tall, with a straight nose and deep eyes. According to Western aesthetics, he is an out-and-out beauty. man. Schuber was originally a lawyer. Before meeting Andrew, he thought about three or four negotiation strategies. He even tried to persuade Andrew with his three-inch tongue. As a result, Andrew's attitude of not getting in the way made all his preparations come to nothing. up.

   "Wait a minute, we need to ask our superiors!" After two minutes of silence, Schuber saw that Andrew still had no intention of letting go, so he couldn't help breaking the embarrassing situation, and at the same time gave himself a little room for buffering.

   "Please go ahead!" Andrew was still indifferent, which made Schuber, who was secretly observing his reaction, feel helpless again.

  …

In the end, the two parties decided to complete the liquidation of 50,000 lots of contracts at USD 15.50. Zhongshi helped Deutsche Metal to temporarily solve the margin problem. In the next five trading days, both parties simultaneously closed 10,000 lots of contracts, and finally all of them were closed on December 8. Lose.

  After the agreement was reached, NYMEX was the most relaxed, and a time bomb piled up on their heads was dismantled, which made their pricing power in crude oil prices not affected in the slightest. However, they have begun to adjust the trading rules, the purpose is to curb excessive speculation in the crude oil futures market.

In the next five trading days, the two sides tacitly carried out a large-scale liquidation of positions, and finally completed the liquidation of all positions on the agreement on December 8, although the crude oil price fell as low as 15.21 US dollars per barrel in the past few days , but was quickly pulled back to around $15.50 by the two parties who had already reached an agreement, allowing the liquidation activities of both parties to continue.

As a result, the 100,000 short positions held by Zhongshi eventually dropped to 50,000 lots, and a profit of 150 million US dollars was recorded. On December 8, the price of crude oil futures contracts also fell to 15.47 US dollars. At that time, NYMEX announced the adjusted trading rules:

"...First, adjust the maximum number of positions in crude oil futures speculative accounts from the original 20,000 lots to 10,000 lots...Second, adjust the maximum number of positions in crude oil futures contracts from 30,000 lots to 20,000 lots...Three, one-way positions exceeding 10,000 lots , must report to the exchange the relevant information of the position holder and the purpose of holding the position..."

  This rule adjustment is aimed at all participants in the market. Although there are restrictions on speculative accounts, it does not currently have a big boost to oil prices. After rising for two trading days, the oil index entered the downward channel again, and even fell below $15.00 at the end of December, which made all the positions of the long-term stalactites liquidated at $15.00. In the end, Zhongshi’s remaining 50,000 crude oil futures contracts were all sold out before the New Year in 1994. At this point, all Zhongshi’s actions in crude oil futures ended, and he finally made a profit of 450 million US dollars.

   Codewords are not easy, and sticking to codewords is even more difficult. I hope you can support me a lot, thank you~

  (end of this chapter)