Bank of China Calls for CME Probe into Crude Oil Futures Debacle


One of China’s big state-owned banks has called for US exchange operator CME Group to look into price fluctuations that led to huge losses for investors in its crude oil futures product.

Bank of China (BOC) has announced that it has enlisted lawyers to send a letter to CME Group, calling for it to look into the causes for “abnormal fluctuations” in prices for crude oil futures on 21 April.

Hun­dreds of BOC’s re­tail in­vestors lost around 600 mil­lion yuan (ap­prox. $85 mil­lion) af­ter plac­ing bets on West Texas In­ter­me­di­ate via its Crude Oil Trea­sure in­stru­ment, just prior to the commodity’s plunge into negative territory on 20 April.

BOC’s “Crude Oil Trea­sure” prod­uct en­abled Chi­na’s do­mes­tic in­vestors to tap West Texas Intermediate oil fu­tures with­out the need to launch an off­shore ac­count. The prod­uct did not per­mit lever­age and re­quired 100% mar­gin. 

The losses have reportedly prompted up to 1000 burnt BOC customers to seek legal advice in relation to pursuing a class action against the big state-owned bank, for full recovery of principal due to invalidity of contract.

In a statement issued by BOC on 29 April it said that it was still negotiating with investors, and would bear its responsibilities in accordance with the existing legal framework.

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