Electronic Disk Life And Death: Investigation Of Jiaxing Cocoon Silk Disguised Futures Disorder

Jiaxing cocoon silk incident refraction chaos disguised futures trading identified need to be clarified

After nearly 6 years of trial, the court closed the court for nearly 6 years. The chairman of the Jiaxing Jiangnan Silk Co., Ltd., the chairman of the great Jiangnan Silk Co., Ltd., was almost indefinitely grateful for nearly six years. The baby also grew up in primary school. However, the great Jiangnan has not yet received a claim for its huge deficit of about 20000000 yuan in Jiaxing's cocoon silk trading market.

According to the press survey, there were ten enterprises that participated in the paction as well as the big Jiangnan, and the related lawsuits appeared one after another in 2005. They were tried by the courts in Anhui, Jiangsu and Zhejiang provinces.

The dispute over electronic pactions that lasted for more than 5 years and spread to many provinces is called the "Jiaxing cocoon silk incident".

Affected by this, the chinese cocoon silk trading market in the Second Ring Road West of Jiaxing, Zhejiang province has been rather depressed. But behind the old market, a stylish 20 multi-storey "international silk trade center" business building has sprung up.

In addition, online pactions, which are now called "spot electronic pactions", are still in progress.

Electronic disk is commonly known as bulk commodity electronic trading market. It refers to the market of spot goods or medium and forward order goods for corresponding articles through network and e-commerce platform.

According to statistics of Ministry of Commerce, China's bulk commodity electronic trading market has only existed for more than ten years, but it has developed rapidly.

By the end of 2009, the total volume of the bulk commodity electronic trading market in China has reached nearly 200, and the trading varieties include more than 100 kinds of agricultural and sideline products, bulk industrial raw materials and petrochemical products.

But behind the rapid development is the chaos of pactions, and even experts say that electronic discs are lawless.

Since the beginning of this year, the electronic disk scandal has continued. At the beginning of the year, Shandong's long Ding electronic disk has been gambling on many occasions. In the early days of July, Shandong's Shouguang vegetable electronic trading market was involved in the black cross settlement.

A series of scandals show that there are rules of arbitrarily amending trading rules in electronic discs, as well as cases where the referees and athletes are not able to dock with the spot market, and speculative funds manipulate prices.

There are different judgments in "disguised futures trading".

The reasons are different. The reason lies in the different cognizance of the "disguised futures trading" in different courts.

After the Jiaxing cocoon silk incident, cocoon silk trading market is becoming more and more depressed.

According to the China Securities Journal reporter, most of the stores in China's cocoon silk trading market have been dusty for a long time, and only a few large scale enterprises regard it as a warehouse for cocoon storage.

But behind the depressed old market is a newly built 20 multi-storey "international silk trade center".

According to the members of the trading market, the building was newly built by the cocoon and silk trading market.

China's cocoon and silk trading market and the cocoon silk market Clearing Corp have moved into the "new home".

The Chinese Cocoon Silk exchange market was established in 1992. It was jointly funded by the China Silk Import and Export Corporation, the China Silk Industry Corporation, and the Silk Company of Jiangsu, Sichuan, Zhejiang, and Jiaxing silk shares (5.20, -0.01, -0.19%) Limited.

The first meeting of the board of directors decided that market pactions should be the spot public bidding paction of the introduction of futures mechanism, and gradually create the pition from standard to standard futures trading.

Since 1995, President Liu Jialin has been appointed by the China Silk Industry Corporation.

In 2002, the cocoon and silk market in China carried out a shareholding system to increase the collective stock of workers.

According to the industrial and commercial registration data, the shareholding structure of the silk trading market in 2005 is divided into two parts: legal person investment and natural person investment.

Among them, the largest single shareholder is the then legal representative Liu Jialin, with a shareholding ratio of 19.82%.

"After the restructuring of cocoon silk trading market, the problem appeared very quickly, and some of the pactions were very irregular."

Ma Xihao said.

China's cocoon silk trading market usually has about 200 hands per day in dry cocoon silk production, while the volume of daily turnover in mid 2005 to 2006 has reached more than 6000 hands, but not even 1 hand physical delivery.

The Attorney General of the great Jiangnan should tell the China Securities Journal reporter that at the end of 2005, the market suddenly came out with several strong bulls.

Until the margin of all the members of the empty party has been sold out, the other party is still issuing instructions to keep the price on a daily basis.

Some members not only finished the margin trading, but also had to pay hundreds of millions of dollars.

"Later we knew that some of the positions of the bulls were not in full, and the amount of security was knocked out by the keyboard.

If there is no collusion between the trading market and the Clearing Corp, how can it be done?

However, the trading market believes that the loss of margin in Jiangnan is caused by its own fault, and it is also a result of its joint efforts with BABEI and Qian Dai companies to manipulate the market.

Such paction risks and responsibilities should be borne by themselves, and the trading market will not be liable for reversion or compensation.

As a result, large scale lawsuits broke out between the silk market, the Clearing Corp and the trading members.

Like the great Jiangnan, Zhejiang BABEI necktie Co., Zhejiang BABEI Silk Industry Co., Ltd., Qidong Di Hua cocoon silk Co., Ltd., Qidong cocoon silk Co., Nantong Mijie silk garments Co., Ltd., Wujiang Miao Gang reeling Co., Ltd., respectively, filed a lawsuit against the Jiangsu, Anhui and Zhejiang courts in the cocoon silk trading market and Clearing Corp.

In addition to the prosecution of Jiangnan first instance in Zhejiang Province, the rest of the litigation in Jiangsu, Anhui and other places ended with the winning of the trading members.

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The reasons are different. The reason lies in the different cognizance of the "disguised futures trading" in different courts.

The intermediate people's Court of Nantong, Jiangsu province believes that this is a dispute between margin market and Clearing Corp for futures contracts and brokerage contracts.

In the early days of the establishment of the trading market, futures trading was organized as a rule of law. However, after the state has applied the licensing examination and approval system to the futures market, the trading market has replaced the word "futures trading" with the name of "spot contract order" or "contract purchase paction" only in terms of its articles of association, etc. its rules and regulations still follow the basic rules of futures.

This is an act of evading the law.

The Jiangsu Provincial Higher People's court held that the spot order paction between the trading market and the Clearing Corp organization is significantly different from the bulk commodity electronic paction, and it has the characteristics of futures trading and has not been approved by the futures management department.

Therefore, the paction is called spot order paction, which is actually a disguised futures paction.

The higher people's Court of Anhui held that the regulations on futures trading promulgated by the State Council and implemented in April 15, 2007 prohibit the disguised futures trading. Before that, there was no prohibition of futures trading in disguised form.

However, the margin for the loss of the contract held by Nantong Mei Jie silk garments Co., Ltd. (hereinafter referred to as the American fashion company) from August 2005 to January 2006, is not caused by the normal paction risk. There is a causal relationship between the loss and the behavior of the trading market and Clearing Corp.

The margin held by the company is deducted by the Clearing Corp after a loss in the paction.

Therefore, the court supported Mei Jie's request for compensation from the trading market and Clearing Corp for its margin loss.

The Hangzhou intermediate people's court is the only court to decide whether a trading member (big Jiangnan) has lost the case.

The court held that the case occurred before the implementation of the Futures Trading Ordinance.

In accordance with the provisions of the Provisional Regulations on futures trading management concerning whether the CSRC has the right to inquire and investigate the units and individuals suspected of having futures violations, whether it constitutes a disguised futures paction shall be determined by the China Securities Regulatory Commission. The people's court shall not exceed its powers to make a qualitative analysis of the nature of the paction pattern identified by the state special administrative organ.

According to the existing evidence, the CSRC has not yet identified the trading pattern of the cocoon silk market as a disguised futures paction.

The trading market and the Clearing Corp suspension of trading and adjustment of margin standards are based on the regulations and rules of the market, which does not constitute a tort to the south of the Yangtze River.

Moreover, the intermediate people's court in Hangzhou believes there is no evidence that there is a problem that the trading market has a virtual trading body and a multi - head unit trading under the condition of insufficient margin.

However, the Zhejiang Provincial Higher People's court commissioned the Shanghai Zhonghua Shanghai silver accounting firm to conduct a judicial accounting audit on the total margin of all the long and short members of the cocoon silk market for 5 days in November 7, 2005, 8, 9, December 12th and 13.

The audit found that there was a virtual market paction to increase the margin of customers, and the use of a member's margin or external loans with its own funds.

Due to the fact that Jiaxing cocoon silk trading and Clearing Co., Ltd. received only 5 million yuan of capital and no other forms of its own funds, as of November 9, 2005, it had accumulated a total loan of 137 million yuan.

The conclusion of the judicial accounting appraisal is that the defendant's Jiaxing silk trading Clearing Corp has the behavior of making loans outside the customer's margin; the defendant's Jiaxing cocoon silk trading Clearing Corp has a virtual increase in the margin of customer pactions, and there is a shortage of customer trading margin in the three day of from November 7 to 9, 2005. Due to the existence of virtual increase in customer margin and credit assets into the customer margin, the declaration and paction of pactions have been affected.

But in the Zhejiang provincial high court only 6 minutes of the trial of the great Jiangnan case, there was no mention of the above-mentioned judicial expertise.

Disputes continue to be illegal.

When the sentencing of the great Jiangnan case is not known, there are a lot of similar litigation disputes.

At the beginning of 2010, the Shandong dragon tripod electronic disk stopped short of gambling, and in the early July, Shandong's Shouguang vegetable electronic trading market was again shocked by the black trade.

"An electronic disk that cannot be delivered is a casino."

Shandong province Jinxiang County, an electronic disk client Yang Fei (a pseudonym) believes that "the electronic disk itself is a capital game, if it can deliver profits, not delivery is a zero sum game.

None of Jinxiang's successful deliveries deviated too much from the stock market, or forced to liquidate the warehouse or cut the warehouse.

Yang Fei thinks that the electronic disk is the same as futures, but the main reason of the malady is that there are no regulatory agencies, and electronic disk vulnerabilities can be seen everywhere.

"The electronic disk market has reached the level of flooding, creating threshold and trading threshold is very low, so long as you have money you can open, and get all the rights to control the market."

One industry insider said that these rights included the formulation and modification of market trading rules, the suspension of trading at any time, the closing of the market ahead of time, the increase of margin ratio and the abolition of dealer qualification, and even the entrance into the market in person, setting up virtual accounts and gambling pactions with customers.

Even more frightening is that these actions are not regulated, resulting in a serious loss of compliance traders, and market disputes one after another.

Shandong's electronic disk trading market is quite rich. The total number of the active mid long term market is over 40. There are 19 records in the Ministry of Commerce, which are still trading, ranking first in the country.

In Jinxiang County of Shandong Province alone, relying on the local garlic industry, there were once more than 10 garlic electronic trading discs.

A customer of an electronic disk in Shandong told the China Securities Journal reporter that customer data was completely exposed to the "backstage" of the electronic business, including the daily service charges, even the order quantity of each customer, the purchase price and the account balance. The dealer operates according to the customer's account. When we make a rise, the dealer will pull lower. As for how much we want to pull, we need to see how much money is left in the account. Until we pull the storehouse, the system will automatically level the client's warehouse and the money will go directly into the dealer's pocket.

Yang Fei likened this to playing cards, and the dealer saw your card completely. The dealer broke the plate and suddenly raised the margin. He never played the dealer.

"Being a referee and an athlete has become a target of public criticism."

An electronic disk customer, who does not want to be named, said that even the electronic disk market unilaterally changed the customer's paction password when the customer stopped operation, so that customers could not operate in the short term and thus miss the stop point.

In addition, the commonly used technique in the electronic disk market is to raise the margin suddenly, from 20% to 50%. If there is no margin deposit, only if it is cut down, even if it is pulled up again, it will not be able to make money because the position is smaller.

Even when delivery, social forces are used, customers want to pull the goods, and they are threatened. "Do you want money or something?"

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If the enterprises involved in the paction want to safeguard their own rights and interests, not only do they not recognize the standard of the disguised futures in law, but also the enterprises need to spend a lot of energy and financial resources.

The great Jiangnan, which had been mentioned before, has already turned off the factory in order to have a lawsuit with the cocoon silk trading market. All the energy of the owners has been spent in the lawsuit, but so far no conclusion has been reached.

As a result, many enterprises, after losing their profits, generally choose to swallow up unless the amount is huge.

"Lawlessness" is the description of the status quo of the electronic disk by Hu Yuyue, director of the securities and Futures Research Institute of Beijing Technology and Business University. The problem is that there are no specific regulatory departments in this market, and there is also lack of relevant laws and regulations.

As an emerging industry, the commodity futures market is facing the most critical issue - the legal gap.

A legal expert said that the blurred boundaries between commodity trading platform and futures would make legal disputes possible in such markets. Because of the vague definition of such market, the court's decisions often vary from place to place.

"Lawlessness" is the description of the status quo of the electronic disk by Hu Yuyue, director of the securities and Futures Research Institute of Beijing Technology and Business University. The problem is that there are no specific regulatory departments in this market, and there is also lack of relevant laws and regulations.

Can the rectification storm be perfected?

The storm of electronic disk rectification has come, but it is still necessary to observe whether the storm can end the chaos of electronic discs.

China Securities Journal reporters in late September in Weifang and other places found that some electronic disk is still pulling customers.

In order to earn fees, the agencies of the electronic disk make great efforts to develop customers under the interest drive, constantly pull more traders into the electronic disk, and rapidly expand their agents and branches nationwide.

The China Securities Journal reporter consulted the local electronic dealer on account of opening accounts. The other side said that their business in Shandong, Hebei, Henan, Jiangsu, Anhui and other places, the natural person's minimum account opening fund is not limited, the enterprise is 200 thousand.

"This is similar to pyramid selling, constantly developing customers, entering this gambling business, casino owners bet on chips, casino chips can be many, and you bet on real gold and silver, you can never win."

Yang Fei said, now the electronic disk continues to do, but the popularity is not good, many people quit, do not do it, the electronic disk has broken the promise, can not retreat out of the people, helpless.

Hu Yuyue believes that the development of electronic disk market in all parts of the country is crazy and lacks supervision for a long time. In a mess, many companies naturally pay more attention to short-term interests, and are even willing to take risks.

"Low cost replication, main entry pactions, misappropriation of customer funds are all problems that need to be solved."

Hu Yuyue told the China Securities Journal reporter that the supervision of the commodity trading market should focus on monitoring the total scale of the listed varieties and the authenticity and security of the deposit.

Commodity futures market should be returned to the spot market. The combination of spot and electronic pactions is the direction of development.

"But if the holding rate is very low and the delivery rate is zero, is it also called the spot market?"

In addition to drilling loopholes, some local governments are also pushing the market.

Because the electronic disk is not only a "test product" of the local government's achievements, but also can bring considerable tax, popularity and consumption to the local community, and even make the local have the ability to decide the price of a commodity.

Ma Weifeng, assistant dean of Shanghai Futures Research Institute, Tongji University, said that due to the lack of credit system in domestic enterprises, there were no laws and regulations, resulting in frequent occurrence of risk events in electronic disk.

The state is formulating the Futures Law and will further improve the definition of disguised futures.

The management measures for commodities trading market drafted by relevant departments are being consulted internally.

An expert involved in the drafting said that the state would further regulate such markets, prohibit the entry of traders without background and prohibit speculation so as to prevent risk events.

At the beginning of February this year, the guiding opinions on the rectification and standardization of the medium and long term trading markets jointly issued by the Ministry of Commerce, the Ministry of public security, the General Administration of industry and commerce, the Legislative Affairs Office, the Banking Regulatory Commission and the six Committee of the securities and Futures Commission (hereinafter referred to as the Guiding Opinions) indicated that "prohibit the new market and new varieties", "guarantee the safety of funds", "prohibit the entry of natural and non industry enterprises", "prohibit agency business", "standardize the form of deposit payment", "limit the maximum quantity of orders for each paction variety and each dealer", and each one refers to the drawbacks of the market.

At the beginning of July, the State Council jointly organized several ministries and commissions to set up an investigation team and went to the whole country to conduct a supervision on the forward and forward market, so as to find out the follow-up supervision policy.

The industry believes that the rectification of the electronic disk storm has come, but whether the storm can end the chaos of the electronic disk, we need to observe.

Insiders told the China Securities Daily reporter that the implementation of policies varies widely.

Shandong Shouguang vegetable electronic trading market Co., Ltd. announced in October 9th that traders with orders from natural persons and industry background enterprises had to close the order after December 31, 2010.

Chai Qinghua, executive director of Shandong Shouguang vegetable electronic trading market limited, told the China Securities Journal that the electronic disk has come to the crossroads and does not exclude the possibility of national closure. They are implementing the national policy.

China's Shouguang agricultural products (23.60,0.03,0.13%) logistics park is preparing for the electronic trading market, and is now in the process of rectification.

"We are still on the sidelines, and the national policy is uncertain for a long time. We are also clearing the accounts of natural persons. The volume of pactions is also shrinking, but we expect to see the regulation as soon as possible," said a head of electronic disk in Shandong.

In Yang Fei's view, the electronic disk is a double-edged sword. It is hoped that through this rectification, the non-standard electronic discs will be completely closed, and standardized to futures and accept unified supervision.