On April 21, the expiration of the future contract May recorded a drop in WTI oil in negative territory to -37.63 dollars per barrel. The Bank of China, on January 1rst, 2018, authorized this derivative, named Nymex Trésor，原油宝. With this fall, more than 60,000 Chinese investors found themselves trapped and could not meet the bank’s margin calls, most of whom are novices in the field. According to the Caixin site, the losses are close to 9 billion yuan (USD 1.15 billion). Customers have lost 42 billion yuan in deposits and have to reimburse 52 billion yuan to the banks.
The grumbling turned to the banks who had not warned customers of the risks involved; moreover, most of them did not understand the complexity of this derivative. For the time being, the banks have not yet demanded repayment.
The Banking and Insurance Regulatory Commission,银保监会, is investigating and promises a regulation according to the law. So some will have cope with their losses ?
5 May 2020