Short Every Rip

The stock market has been grinding lower and keeps taking out important support areas. If you look at the 1 minute chart or similarly short timeframe, you can see multiple hits on the ES at 3700 and 3680. There is resistance at these levels as well. Which way will the market go?

This trendline is incredibly important for whatever reason.

There is heavy call buying after previous high put buying, pushing prices way up.

The long-bonds continue cratering.

USDJPY has been hitting new highs day after day, but the Korean won paused. A resumption of highs would be bad news for bulls because the Chinese yuan will follow.

Gold made a new low this morning. It is going to plummet along with most other assets given how bonds and the U.S. dollar is behaving. It seems like everything is being suspended to prevent options from paying off at this month's opex.

The counter explanation is stocks are leading what will be a rally in all assets, including a reversal in the U.S. dollar, but the fly in the ointment remains stubbornly strong crude oil.

I posted a list of stocks last night. These are stocks that fell on high volume yesterday. There are a lot of symbols I've posted in previous months, going back to late last year. Many of these charts are already way down, yet also only now completeing topping patterns that point to far larger losses ahead. Point being, there are more targets than capital at this point. It's a shooting gallery for bears out there. If the indexes resume their move to new lows, there will be massive losses in the less liquid sectors of the market.

Global Margin Call

ATimes: Global margin call hits European debt markets

Risk gauges in Germany’s government debt market rose last week to levels higher than recorded in the 2008 world financial crash, as margin calls forced the liquidation of derivatives positions held by banks, insurers and pension funds.

Big institutional investors that spent the past ten years insuring their portfolios against falling interest rates now face massive losses as hedges blow up. A key measure of market risk, the spread between German government bonds (Bunds) and interest rate swap agreements jumped above the previous record set in 2008.

The cost of hedging German government debt with interest-rate options, or option-implied volatility, meanwhile rose to the highest level on record.

More Crash or Bounce Indicators

The case for a bounce: there's no panic yet. Oversold conditions, extreme positioning makes for rally fuel.

The case for a crash: there's no panic yet. Oversold conditions, extreme positioning makes for crash conditions.

Clear as mud.

ZH: Friday Was The Highest Put Option Volume Session In History

I checked in on bullish percent. Tech is approaching zero.

Cycles Say Climate Trouble Coming

Weather volatility is only going to increase, and soon, with a 100-year drought setting in for the U.S. Midwest in 2024-25.

Real Vision interview with Shawn Hackett: Why Weather Will Be the Greatest Disruptor

Updated: Loaded up on XLC for August

I still have cash to deploy, but this trade is set.

I put details on Twetch.

XLC calls remind me of XLY puts at the start of the year. I was targeting XLY because AMZN and especially TSLA puts were far more expensive. To give a ballpark idea for why I like XLC despite it being illiquid, as XLY was back in December and January: for a given rise in XLC and META, the cost of XLC calls is one-tenth the cost of META options. The latter should rally more than XLC, thus it isn't aaples to oranges. Even at the same OTM delta though, XLC is half price. Conversely, if by some luck META actually rips higher and went into the money on this way OTM same-delata call, it would by itself get me halfway to ITM on the XLC calls, despite only being about 18 percent of XLC.

The main holding in XLC is Alphabet at nearly 25 percent of assets. It has about 5 percent to my lower horizontal, about 9 percent up to a resistance area, and 15 percent up to a gap. If this turns into a big rally, then I think it gets to around 15 percent. That would mean a highly profitable XLC trade. As for options, Google is also considerably more expensive for similar strikes. Add in Netflix, and that's almost half the portfolio in

The Long and Short of It: Crash Time

The crash window is open. It needs confirmation from high-yield debt. Once that goes, we'll have a credit event in addition to the stock market event, and then we can get free falling moves in stocks. Technical indicators are extreme as well. The crash window can also slam shut and trap the bears. My highest confidence trades are in treasury bond calls (TLT) and crude oil puts (USO).

BTC is busted again, but off the lows. HYG hasn't busted a support line, but it has a similar h-pattern forming.

All the pieces are in place for a rally, and a big one. After days of relatively even put/call buying by one ratio I follow, puts surged this morning. It looks like the opening of the collapse in SPY to new lows that kicked off on June 9.

Barring a bear trap here, the XLC trade is in the shitter.

NQ broke the megaphone. There is basically no downside support except the prior low.

Missed 10-Bagger: XLU

Tim Knight did a premium post on XLU two weeks ago. The price cratered early and bounced. A relatively high price after that was $64.50, so let's go with that. It closed at $69 per share on Friday. I skipped this one because I expected areas such as tech and biotech would lead the rally and because I thought XLU might not bounce much with rates stuggling to rise. I know, however, that XLU options can be extremely profitable in surprising moves because they are priced for low volatility. I remember checking the options, but didn't think XLU would pop enough for a trade. It did. Going out a few dollars on a monthly call expiring in July (like say $68) would be be more than a 10-bagger, as would many other strikes. Point being, big money can be made when the market is "mispricing" the options becuase it doesn't appreciate the risk of it blowing up or down. Whereas stocks like GME and TSLA have huge premiums baked in, many stocks and funds the market is sleeping on can deliver huge returns if you have the timing right.

Options Market

Yesterday, I saw a post on social media showing put options at a local low. That has been a sign of rallies losing steam lately. The amount of puts rose yesteerday though.

As you can see from the chart there has been an uptick in put buying this year, which puts a local low in context. The put-call ratio can go much lower in a significant rally, perhaps even reset.

Today, I saw this:

ZH: Bears Are Taking Over The Options Market

the 10-day moving average of put options traded in the US stock market - a gauge of speculative downside protection bets - has pushed above the equivalent for bullish calls for the first time since 2020, according to data compiled by Bloomberg.

Chinese Snowball Derivatives Meet Hell

August 2021: China regulators step up risk control over popular Snowball derivatives - sources

China's securities watchdog has tightened scrutiny on a popular derivative product dubbed Snowball, three sources told Reuters, as regulators seek to rein in risks in an opaque, $60 billion market.

Snowball, which offers a risky bet on stock market volatility and delivers double-digit, annualised returns barring a market tumble, has gained popularity among yield-hungry investors.

Pennies in front of the steamroller: selling volatility.

"Snowball products are often marketed as a type of fixed-income products, and investors are not fully aware of the risks. This worries regulators," a source said.

Here we go.

Some rival products offer annualised returns of as high as 20%. The benchmark Shanghai Composite Index SSEC. has gained 1.49% so far this year.

"You make money in a volatile market. You make money in a bullish market. But if you buy the product at the start of a bear market, you lose," Wang Yichao, managing director of Guotai Yuanxin Asset Management Co, told a roadshow on Snowball on Thursday.

About that: not quite a bear yet, down 15-percent from the recent high to the recent low. Do you want to bet on that trendline holding though?

This article in iFeng says snowball products are being blamed for recent market weakness: 雪球“背锅”市场大跌？业内：一切销售正常，不宜妖魔化！真相如何？

"Recently, the sales of Snowball products are normal. The index snowball at the retail end has not been knocked-in in a concentrated manner. There is still a lot of room for the knock-in line. The possibility of the index falling sharply at this position is relatively low, so we I think the overall risk is still controllable." A person from the innovative finance department of a large securities firm in Shanghai told a Chinese reporter from a brokerage firm.

Another brokerage sales person said that there is no special response from customers to Snowball products at present, and the company is also continuing to issue Snowball products.

"I have heard some unfriendly remarks, but those are all speculations of people in the non-derivatives industry. In fact, derivatives play a role in calming fluctuations in the market." said a derivatives person at a brokerage.

"Because the snowballs that open at the high point are basically 12 to 24 months in duration, the probability that the index will not rebound for such a long time in the future is very small, so as long as customers have a certain amount of patience, they can also get the set price at the beginning of the period. Profitable. Of course, I personally think that this kind of knock-in situation is basically difficult to occur, and it is an extremely unlikely event." The above-mentioned person explained.

A market source said that it is not appropriate to over-beautify snowball products, but it is also not appropriate to demonize them. Snowball structure products have certain risks, which mainly depend on the accuracy of investors' prediction of the market. According to him, there are two main types of risks in snowball structure products: one is the risk of knock-in caused by falling market prices, that is, the risk of principal loss; After the Snowball product was knocked out in advance, it was difficult to find the risk of assets with higher yields.

Another article: 雪球产品被传“爆炸”，是否该为市场急跌“背锅”？

2. Has the index plummeted snowballed "because of the blame"?

An asset manager of a brokerage firm in East China said that the reason cannot be attributed to a certain type of product, the scale of derivatives will not be very large, and the impact of snowball on the market will not be so great.

Yu Mingming, chief of the gold working group of Cinda Securities and deputy general manager of the research institute, pointed out in previous research that Snowball is not a beast. Acting on the convergence of the stock index futures discount rate will not have a significant impact on the direction of the index.

Mr. Jia, who is engaged in market work in the financial leasing industry, often comes into contact with options in his work, and has also been concerned about Xueqiu products for a long time. He analyzed that: "Look at Xueqiu's contract and know that if you type in, the product will be a fixed income product. It has become a futures index product that rises and falls with the index.”

In his understanding, the knock-in means that the over-the-counter put option has been exercised, and the product itself has no leverage.

Specifically, it is inevitable that the most important Greek letter of Snowball products - Delta.

According to Yu Mingming's analysis, Delta is the change between the product price and the underlying price. For ordinary vanilla options, the delta range is between [-1, 1], but exotic options no longer follow this principle. The figure below shows the Delta of the snowball structure. Distribution chart, in which the horizontal axis is the percentage of the underlying price, and the vertical axis is the delta value. As can be seen from the figure, when the underlying price is near the knock-in boundary of 0.85, the delta is the largest, about 1.6, and as the underlying price rises, the delta Rapid decline, when the underlying price exceeds the knockout boundary of 1.03, the Delta tends to 0, and the price of the snowball is no longer sensitive to the underlying price.

Maybe the "snowball derivatives" won't all melt to zero in a bear market. Or maybe they will, but won't cause major knock on damage. At the very least however, they show the type of reckless risk-taking that is found at speculative tops. My bet is that trendline on the Shanghai Composite won't hold.

Put-Call Ratio and SKEW

Investors have to pay a premium for puts, but it looks supply-driven rather than demand-driven.

China Adjusts Margin Rules for Some Traders

Reuters: China adjusts margin rules on stock index futures to reduce trading costs

The China Financial Futures Exchange said that starting June 3, investors holding both long and short positions across the three types of index futures instruments on the exchange are subject to margin requirements targeting the bigger positions.

...The new rules can “help reduce operating costs” for investors in a range of instruments, the exchange said.

21st Century: 引入单向大边保证金 期指持仓成本下降近五成
Sogou: The introduction of one-way large margin futures has reduced the holding cost by nearly 50%

In response, Fang Chen, a researcher at Citic Futures Financial Futures, pointed out that the adjustment could significantly reduce the occupation cost of cross-breed arbitrage investors. "It is expected to release nearly 50% of the deposit. In theory, the margin released can be used for another arbitrage, but it also depends on the space and capacity of arbitrage. "

The article gives some examples of how this will work in practice, but the translation is not clear. If you're interested and can read Chinese, read the original.

The Red Line: China Defends Yuan at 6.90

The PBoC changed margin requirements of FX traders today, hiking from 0 to 20 percent. There's no fundamental reason for the shift except that the bank has begun its defense of the currency. Although USDCNY 7.0 is widely expected to arrive in the next 5 months, it is an unknown how the wider market will respond. Depreciation pressures haven't intensified yet, but at some point it will begin and even ordinary Chinese will start thinking about moving money overseas, trying to buy some dollar deposits, buying gold, etc.

Changing margin requirements is a low cost move that won't cost any reserve, but it does now heighten the game as the central bank reveals where it will begin defending. Up until now there's been a widespread assumption, mostly from late arrivals, that the decline in the yuan was part of the trade war. Instead, it was almost entirely a result of the rising dollar. Trump's escalation to 25 percent tariffs did ignite some yuan-specific selling as the yuan and Chinese stock market have led the emerging market complex lower in the past few days. Still, yuan depreciation to this point is well within the expected range given U.S. dollar appreciation.

The PBoC's move wasn't cost free though. Until now it wasn't clear if the Chinese wanted the depreciation or not. Now they've shown their hand. USDCNY 6.90 is where the battle begins. If China will spend reserves to defend the yuan, it is above USDCNY 6.90. The game is afoot.

ZH: China Nukes Yuan Shorts: PBOC Raises FX Fwd Reserve Requirement To 20%

PBoC Scrutinizes Cross-Border Transactions, Says Banks Increasingly Using SWIFT

Originally posted on July 28, updated with English coverage below.

The PBoC is strengthening supervision of cross-border financial transactions as yuan depreciation expectations pick-up and as monetary and fiscal stimulus policies are about to hit the economy, potentially attracting hot money from overseas. The announcement says domestic financial institutions are making greater use of the SWIFT system, not China's CIPS alternative, for cross-border transactions.

The full announcement can be seen here: 央行重磅发布！关于加强跨境金融网络与信息服务管理的通知！

As China's financial industry continues to deepen its opening up, Chinese banking financial institutions (hereinafter referred to as domestic users) are increasingly using overseas institutions such as the Global Banking Financial Telecommunications Association (SWIFT) (hereinafter collectively referred to as overseas providers). Cross-border financial networks and information services. In order to maintain cross-border financial networks and information security, and comprehensively implement financial market infrastructure supervision to effectively prevent systemic financial risks, the notice on strengthening cross-border financial networks and information service management will be notified as follows......

Zaobao summarizes the announcement: 中国央行加强跨境金融网络与信息服务管理

The People's Bank of China issued a notice on strengthening the management of cross-border financial networks and information services on Friday. The central bank, based on the macro-prudential management needs, conducts an assessment of the matters reported by overseas providers and the reporting of domestic users.

According to Reuters, the notice stated that overseas providers should not build special financial networks in China to provide financial information transmission and other services. An offshore provider may authorize an institution established in China to perform relevant reporting obligations.

The notice requires that overseas providers and domestic users should join the China Payment and Clearing Association and accept industry self-discipline management. The China Payment and Clearing Association shall, in accordance with the requirements of this Notice, formulate and improve the self-regulation of cross-border financial networks and information service industries, establish cross-border financial networks and information services risk protection and self-discipline and disciplinary mechanisms, and effectively safeguard member institutions in cross-border networks and information services. Legal rights.

The cross-border financial network and information services referred to in this notice refer to overseas providers providing services such as cross-border financial information for domestic users through special financial networks and using specific message standards. Domestic users and overseas providers shall abide by the laws, administrative regulations and relevant regulatory provisions of the People's Republic of China, and jointly defend against cyber attacks and maintain cross-border financial networks and information services in accordance with the service agreements signed by the two parties.

Here's an "unrelated" article discussing how Chinese SOEs have begun relying on overseas financing channels.

JRJ: 中央企业跨境融资政策运用分析与实践

Changes in cross-border capital flows have driven the capital account convertibility process, and the capital account convertibility process has created new opportunities for cross-border financing. “No. 9 Document” allows non-financial enterprises to establish a financing relationship directly with overseas financial institutions by using the net capital as the upper limit of the calculation, so that the overseas financing costs of enterprises are more transparent, and the funds are allowed to be transferred back to the territory and used for settlement within a reasonable use. The supplement of working capital opens up new channels.

Comparing and analyzing the comparable costs of the same currency and the same-term financing in the domestic and overseas financing markets since 2011, it can be divided into three stages.

Before 2014, "there was a clear distinction between the two." Integrated cross-border financing costs (including interest rates, exchange rates locked and withholding taxes) relative to the same period the territory of RMB financing cost advantage is obvious, but as mentioned earlier, quite a long time prior to 2014, our country in order to "control the inflow" for the Foreign Exchange Management The main tone, cross-border financing inflows and capital account convertibility are limited, funds cannot be repatriated, and domestic and overseas financing is still in isolation.

In 2014, “inflows into reforms and gradually became in line”. The domestic interest rate decline in the renminbi is obvious. After the renminbi continues to appreciate, the swap point gradually rises. At the same time, the reform of foreign exchange inflows has entered the fast lane, and the inflow of reforms has pushed domestic and foreign financings closer together, and domestic and foreign financing rates have gradually tended to converge.

After 2015, “both in parallel, seeking a window”. From 2015 to 2017, the cross-border financing window appeared in stages, and its causes were relatively complicated, but it provided an operational window for enterprises to reduce financial expenses through cross-border financing.

...The swap process is for the enterprise to transfer the foreign currency principal to the domestic bank on the transaction start date and obtain the RMB principal. Subsequently, the RMB interest and principal are repaid to the domestic bank on schedule, which is equivalent to the ordinary RMB interest-bearing loan. After the domestic bank obtains the foreign currency principal on the transaction start date, it will pay the foreign currency interest and principal to the enterprise on schedule according to the agreement, and the enterprise will immediately transfer it to the overseas bank to complete the foreign currency loan interest payment.

...In the transaction, the interest rate and exchange rate risk of foreign currency loans have been circumvented, but during the duration of cross-border financing, exchange gains and losses in accounting still exist.

The general principle of valuation accounting is to repay the foreign currency debt at the current market conditions and prices and to close the cross-currency interest rate swap transaction at the time of the statement. The company will use the cost or income obtained as the measurement standard. Foreign currency floating rate debts are measured at amortized cost and converted at current exchange rates to form exchange gains and losses. For the measurement of cross-currency interest rate swaps, the valuation is included in derivative financial instruments and gains and losses from changes in fair value. The fair value of the cross-currency interest rate swap is calculated by discounting the subsequent principal and interest cash flows.

To sum up, with the support of the full-caliber cross-border financing macro-prudential management policy, enterprises can comprehensively select commercial banks with strong domestic and overseas coordination capabilities, capital costs and transaction costs to establish credit cooperation, and choose overseas based on market window. Financing is a useful complement to the company's funding needs.

China has implemented strict capital controls and tight credit regulations. Use of the SWIFT system is rising. Occam's razor says Chinese have found a way around those regulations.

Updated

Yicai: PBOC Demands ID Check for Over USD1,000 Overseas Transfers to Stop Money Laundering

China’s central bank is tightening up capital controls to verify transfers that exceed USD1,000 to stop money laundering and has already fined firms failing to comply with the new rules.

The People’s Bank of China released four policies to stop criminally inclined capital outflows on July 26, after which it has fined some of China's securities firms, insurers and third-party payment platforms such as Alibaba's Alipay and Tencent's Tenpay for related wrongdoings.

The scope of the four notices included identity verification, the scale of cross-border payment transactions, management of high-risk businesses susceptible to money laundering or terrorist financing, as well as safekeeping of transaction records. In addition to financial institutions, also real estate developers and accounting firms must report to the central bank.

Regarding cross-border payments worth more than CNY10,000 (USD1,470) or USD1,000, or alternatively an equivalent amount in another foreign currency, the PBOC requires institutions to record the payers’ ID credentials and verify their personal information.

PBOC fined Alipay and Tenpay CNY600,000 (USD87,900) each on July 24 for processing cross-border payment transactions beyond the approved business scope, incorrect filings of these payments, and failures to report risks.

Apple Futures Trading Matches Stock Market Trading in China

China's "unprecedented in world history" money creation leads to an unending series of financial bubbles. This time apples.

The real estate, stock and bond markets soak up a lot of capital, but with no major rally in stocks and bonds and a crackdown on real estate underway, speculators are pouring into any asset they can find. In this case, apple futures. Not the stock. The fruit.

Volume in APPLE FUTURES on the ZHENGZHOU COMMODITY EXCHANGE was $60 billion (dollars not renminbi). The trading volume on the Shanghai and Shenzhen stock markets was $63 billion.

SCMP: Which is more tasty? China’s apple futures craze, or mainland’s stock market

An apple frenzy is gripping China, as the country’s recently launched futures for the fruit hit a fresh record high on Wednesday, attracting nearly US$60 billion of fund inflows, close to the combined turnover of US$63 billion for the Shanghai and Shenzhen stock markets.

...Since the beginning of April, the price for the October delivery contract has soared around 40 per cent.

“A trigger [for the price surge] is the recent cold snap in northern China, which has fuelled expectations of a sharp supply cut this year,” said Hou Zhifang, a futures analyst for Founder CIFCO Futures.

A trigger, but not the cause. The cause is the PBoC.

Officials are reacting with higher trading fees.

Reuters: China says to adjust intraday transaction fees for apple futures

21st Century: “疯狂”的苹果期货 “懂期货的不懂苹果，懂苹果的不懂期货”？ (Crazy Apple Futures, "Those who understand futures don't understand apples, those who understand apples don't understand futures)

On May 15th, the turnover of Apple's 1810 futures reached 252.8 billion yuan, and the instantaneous market share of Shanghai and Shenzhen was 162.99 billion yuan and 215.12 billion yuan respectively.

...Behind the "crazy" Apple trading volume is that this new breed of futures is playing a vigorous short-term rally in the past month. Since the beginning of April, the 1810 futures price of Apple's main contract has risen from 6,500 yuan/ton to a maximum of 9,235 yuan/ton. In just one and a half months, the cumulative increase has been as high as 38.75%.

Wang Ping calculated for himself an account. If he can hold a long position so far, according to 5 times leverage, the actual investment return in the past month is as high as 190%.

"But I quit in mid-April, because I think it's more like capital's foolishness," he said frankly. The experience of investing in the futures of apple futures for more than a month has led him to discover an interesting phenomenon: If he understands futures, he does not understand Apple, and he understands that Apple does not understand futures. So Apple Futures became a game for realizing wealth transfer between hot money.

With the wave of apple futures hype, regulatory authorities have begun to take measures.

Once the bubble in apple futures is over, what's next? I have no idea, but I know one thing for sure: this giant wave of liquidity will eventually find its way into gold. Especially in light of tight capital controls, it'll be the best place to hide from currency depreciation. And if apple futures volume can match the stock market, gold futures will one day dwarf the stock market.

Regulators Expected to Target WMP Substitutes: Structured Deposits

Some banks may be disguising derivative products to get around regulations of WMPs.

iFeng: 结构性存款竟有“假结构”？据说监管层要动手了

he reporter from the China Securities Journal (ID: xhszzb) learned from a number of bank management personnel that due to the fact that some banks disguised structural deposits by “false structure” and “high interest rates,” the industry expects that false structured deposits will be in the industry. It is an open secret that regulatory policies on structured deposits will be introduced.

According to a correspondent from a certain bank to the China Securities Journal (ID: xhszzb), the company will begin to regulate part of the structured deposits business.

...Structured deposits, by definition, refer to the use of financial derivatives on the basis of ordinary deposits to link investment with interest rates, exchange rates, stock prices, commodity prices, credits, indices, and other financial or non-financial objects. Financial product.

Structured deposits belong to the bank's on-balance-sheet business, which is divided into two types: capital preservation and non-collateralization. The interest rate is usually between 4% and 4.7%. The China Securities Journal (ID: xhszzb) has learned that banks usually report structured deposits. Report together with the capital preservation management.

Structural deposits are not new in the country. However, after the introduction of new regulations on asset management, structural bank deposits are regarded as one of the substitutes for bank wealth management products because of the restrictions on bank off-balance-sheet businesses . Therefore, the scale continues to rise.

And derivatives never blow up...

Henan Looks to CDS For Debt Relief

Caixin: Henan Considers Credit Default Swaps as Debts Mount

The government of Henan is planning to set up a financial institution to sell credit default swap (CDS) contracts in a bid to offer credit enhancement services to SOEs, including the largest coal producers and steel makers in the province, including Zhengzhou Coal Industry Group Co. Ltd., and Anyang Iron & Steel Group Co. Ltd., to lower their financing costs, according to a document posted on the official website of the Henan provincial government.

In the annual government work report delivered by Premier Li Keqiang earlier this month, the central government stressed that bond defaults are a major risk facing financial markets.

Henan is the second province to try the tool, following in the footsteps of Shanxi province, China’s top coal producing region, which established a company to sell CDS contracts in September.

PBoC Halts Bond Futures, To Increase Liquidity Amid Rising Default Risk

Signs signs, everywhere signs.

WSJ: China Halts Trading in Key Bond Futures as Panicky Investors Sell Securities

Chinese bond yields soared and authorities halted trading in some futures contracts for the first time on Thursday, as a global bond-market selloff worsened a day after the Federal Reserve signaled a quicker pace of interest-rate increases next year.

iFeng: 媒体：央行去债市杠杆目的已达到 将力避事态升级

Whether the bond market to follow the stability, will depend on whether the central bank to promote the "deleveraging" and follow-up Monetary Fund redemption situation can improve. Industry experts said that the adjustment for the bond market, not the debt crisis. The central bank's purpose is to promote the bond market orderly "deleveraging", I believe the central bank will increase liquidity in the short term, to stabilize the current financial situation of tension.

Yesterday's close, bond futures fell across the board. Among them, 10-year bond futures contract the main contract T1703 closed down 1.81%, the largest since the listing of the decline, reported at 94.555 yuan, 102,700 hand turnover. 5-year bond futures main contract TF1703 closed down 1.16 percent, at 97.595 yuan, traded 17,700 hands.

Reporters statistics found, T1703 from October 24 to 101.600 yuan has been reduced to December 15 of 94.555 yuan, 39 trading days, fell 6.93%.

Another market news that the liquidity in the interbank market continued tight situation, yesterday morning, a number of banks once interrupted the operation of the industry, the four lines of ICBC to split the bank only part of the funds.

With the bond market volatility intensified, Chenming Paper, Huayi Group, China's salt and other seven major issuers announced yesterday to cancel or postpone the issue of more than 60 billion total bonds.

Here's the T1703 contract being discussed. The contract bounced to 95.17 in early Friday trading, up 54 fen from the Thursday close.

Nasdaq Plans China Commodities Futures in Singapore

FT: Nasdaq plans China commodity futures trading in Singapore

Nasdaq is planning to give investors direct exposure to China’s freight, iron ore and crude oil markets, through offshore futures contracts traded in Singapore — joining other exchanges in a wider push into Asian derivatives trading.

Hanne Johansson, Nasdaq’s global head of commodity sales, said the exchange believes new products can help satisfy demand for offshore access to Chinese markets, in much the same way as offshore renminbi trading in Hong Kong and London does.

“We want to explore how we can actually bridge these two markets,” Mrs Johansson said, referring to mainland China and offshore derivatives trading venues.

iFeng: 商品牛市令人眼馋 外国人正准备撬开中国期货市场大门

Divergence in Commodities

The futures volume in China continues to drop even as prices rise.

China May Relax Index Futures Rules

Bloomberg: China Said to Plan Index Futures Revival After 99% Volume Crash

China’s futures exchange is planning to relax trading restrictions on stock-index contracts that sparked a 99 percent plunge in volumes last summer and heightened concern over the government’s intervention in markets, according to people familiar with the matter.

A contrarian signal.