Chapter 867 The King of Wall Street (7)

   "Are you sure they are not against us?"

Jamie Thompson rushed into the CIO's office angrily, pointed at Bruno Ixil's nose and asked, "The current position has swelled to nearly 180 billion US dollars, which far exceeds the need for hedging. Could it be that Isn’t Tianyu Fund against us?”

   At this time, three months have passed since Zhongshi purchased the IG9 five-year contract. During these three months, the market has always had a force against JP Morgan on the IG9 contract, buying the five-year contract and selling the ten-year contract at the same time, so that the phenomenon of narrowing the price difference that JP Morgan hopes has never appeared.

"Not too possible!"

Bruno Ikhil raised his head, with a pair of huge dark circles under his eyes, and replied weakly, "It's just a deal worth 30 billion US dollars, and the cash is only about 1.5 billion US dollars. I'm afraid such a deal Domain Fund still doesn’t like it.”

   "Besides, this guy Zhong Shi likes on-market trading the most. They basically don't get involved in derivatives. At most, they are some futures or options. I'm afraid he doesn't even understand what a CDX index contract is now!"

  He yawned, fell into a drowsy seat on the seat, and his words were already a bit out of line.

Last night, he participated in a crazy party in Berlin and played until three o'clock in the morning. Today, he flew back to London at eight o'clock in a hurry. He didn't even have a quarter of an hour to rest. No wonder.

"boom!"

Seeing his appearance, Jamie Thompson couldn't help but sigh in his heart, but it's a pity that the CIO's office is directly managed by the US headquarters, and he, the top leader of derivatives in London, only has the responsibility to inquire, but not to manage permission.

Holding a cup of coffee, he stopped at the other party's desk furiously, and after signaling the other party to refresh himself, he continued to ask, "Don't forget, they bought an IG9 contract worth more than 10 billion U.S. dollars from us. Why am I losing my memory now, and think that the other party doesn’t understand derivatives? Tell me, why do you think they are not against us?”

   "It's not easy!"

After taking a sip of coffee, Bruno Ixil reluctantly pulled himself together, and said impatiently, "Compared with the European debt crisis and the fluctuation of the euro exchange rate, they will care about our small market. ?"

  Although the global derivatives market is huge, there are various types of products such as options, futures, forwards, swaps, and credit derivatives. In the credit derivatives market, the CDS market is only a part of it, and the IG9 contract is a smaller part derived from the CDS market. It can be said that if you are not a professional, you will hardly notice that there is such a market.

Compared with the stock market, bond market and foreign exchange market affected by the European debt crisis, although the IG market has a lot of contract value, it is not an order of magnitude compared to the above-mentioned markets. None of the qualifications.

  Jamie Thompson was stunned when he heard what he said. After thinking about it carefully, he felt that what the other party said seemed to make sense.

   "He is a big guy, so he will naturally focus on the big market!"

Bruno Ixil rubbed his eyes and continued to explain, "Even if we really focus on a market like ours, the funds that can be spent in advance are limited, and it is impossible to sustain it for a long time. For us, almost There are endless funds at the disposal of this market, so even if they enter, I am not afraid!"

   "Also, do you really think they'll be able to spot an anomaly in this market?"

Before Jamie Thompson could say anything, Bruno Ixil smiled contemptuously and continued to explain, "Because of our actions, the CDS price in the contract and the CDS price in the IG index have deviated. Only institutions that conduct arbitrage in this area will discover this phenomenon, and then discover our tricks in the IG9 contract. Think about it, what kind of institution is arbitrage in CDS and IG contracts, do you think Tianyu Foundation Spending time on it?"

  To give an example, a company has a bond worth 1 million dollars. Under normal circumstances, its CDS price may range from several thousand to tens of thousands of dollars. As for the price of IG contract and CDS, if the deviation in the middle is 10%, it means that there may be arbitrage space of several hundred to several thousand dollars between the two, which is really pitifully small.

  So the logic of Bruno Ixil is that, instead of spending time on taking such a small profit, it is better to directly enter the original target market.

   “Only if we find tricks in the arbitrage market, it is possible to follow the clues to notice our activities in the IG market.”

Bruno Ixil continued, "If it's a stupefied young man who enters rashly, then we'll just smash him to death with a huge amount of money, so that they can't keep going, and they're finished. If it's another organization, they will definitely investigate Who is the opponent, I think once they know that we are hedging, they will avoid it in all likelihood, after all, they don't want to confront us head-on."

   "But what if they don't get out of the way?"

  Hearing this, Jamie Thompson's doubts have gone to seven or eight points, but he is still a little uneasy, and he continues to ask along the other side's words, "If someone wants to snipe our position, what should we do?"

   "You underestimate my energy too!"

Regarding Jamie Thompson's question, Bruno Ixil raised his mouth, sneered and pushed the phone in front of the other party, saying, "You can call the banks with the largest positions in the derivatives market and find out their related information. Traders, see if we have the same position in the market!"

"what do you mean…"

  Jamie Thompson did not answer the phone, but looked at the other party suspiciously, and asked uncertainly, "Is there some kind of agreement between you?"

"right!"

Bruno Ixil raised his head, drank the coffee in one gulp, then squeezed the paper cup into a ball and threw it into the trash can forcefully, then said in a relieved voice, "In fact, we have long realized that if When we all appear in a certain market, disputes will inevitably arise because of certain interests. This situation can only lead to mutual losses. So a long time ago, we discussed with each other to manipulate different markets at the same time, instead of You compete for each other in a market, so that everyone who has money can earn money together, reaching Pareto optimality, hahaha.”

"so?"

It was the first time for Jamie Thompson to hear such an inside story. At this time, he couldn't help but feel a little regretful. He wished that he hadn't heard what the other party said just now. You must know that this kind of series and manipulation of the market, once discovered, the consequences would be severe. Unbelievable. But now he doesn't regret that the medicine can be taken, so he can only bite the bullet and continue to ask, "Is it safe to do so?"

"certainly!"

  Bruno Ixil replied confidently, "Let me see how this market operates!"

As he spoke, he tapped the keyboard, and a series of numbers appeared on the screen within a few seconds. After a minute, the two curves that were flat just now showed signs of separation, "See, I just sold 1 billion US dollar IG9 five-year contract, and at the same time bought a US$1 billion IG9 ten-year contract, just two operations, the interest rate difference between the two parties has been expanded again. Look, as long as the interest rate difference widens Under the circumstances, our interests will continue to flow in.”

  Although he didn't understand what the other party said, but seeing his confident appearance, Jamie Thompson had to forcefully suppress the doubts in his heart.

   "Better not to make mistakes, otherwise..."

  He hummed twice, then walked away. All he could do at this time was to speak harshly.

  In fact, he has also put forward regulatory opinions to the US headquarters, but they have all been refuted without exception. The CIO department generates so much profit for the headquarters every year, and also successfully protects JP Morgan's bond position. Although their operations are now beyond the scope of hedging, the US headquarters still opens their funds to them, allowing them to fully invest engage in speculative activities.

   "I hope that Zhongshi can discover this market, and let us see who is more powerful!"

  But just when Jamie Thompson was about to walk to the door, he heard Bruno Ixil muttering to himself, he staggered and almost fell down.

  For this subordinate, he is already at the end of his rope.

  …

   "A sell order appeared again!"

   New York, Wall Street, Saba Capital Management.

  Saba Capital is a hedge fund founded in 2008 with an initial amount of only US$140 million. Although it has grown in recent years, the total size of funds under management so far is only US$2.2 billion.

   This is a typical small and medium-sized hedge fund on Wall Street. It has an aggressive style and fierce strategy. It does not miss every profit opportunity in the market.

  It is also one of the many hedge funds that entered the IG contract and CDS arbitrage market. With its keen insight, this hedge fund discovered something wrong with the market, and then realized that it was artificially manipulated in the IG9 market.

   Saba Capital quickly rushed in, and it was impossible for them to give up this kind of opportunity. But after entering, they discovered that the water in this market was very deep, so deep that it almost submerged them.

   "20% off!"

  At this time, Boaz Weinstein, the fund manager of Saba Capital, looked at the floating and loss figures displayed on the computer screen, his brows were furrowed, and he seemed helpless. He was holding his hands tightly and praying for something.

  Boaz Weinstein, a former derivatives trader at Deutsche Bank, was a money-making machine at the beginning of his career, and he was able to help Deutsche Bank earn tens of millions of dollars every year. But the good times didn’t last long. During the 2008 financial crisis, his team made a wrong bet, which led to a major mistake, which eventually caused Deutsche Bank to lose $2.8 billion, so Boaz Weinstein was swept out of Deutsche Bank.

  However, Weinstein soon set up his own business, established the current hedge fund, and continued to fight in the derivatives market.

  The strategy of Saba Capital is completely opposite to that of JP Morgan. They buy the five-year IG9 contract and sell the ten-year IG9 contract at the same time, forming a counterparty with the other party, hoping to use their own strength to correct the market. But over the past two months, their efforts have repeatedly proved futile, and to their horror, the amount of funds of this opponent seems to be endless. Tens of billions of dollars of contracts were sold.

  The result is that Saba Capital is simply unable to reverse the market situation, and the positions they hold are naturally losing money step by step, from the initial 1% to the current 20%.

   "Hurry up and show up!"

  Boaz Weinstein folded his hands and stared at the market, hoping that the market would correct itself as soon as possible, although he knew it was unlikely. However, in the last few months, he found that although the opponent has been selling continuously, the price difference between the two contracts has opened up less than the speed of the increase in the contract value. This discovery made him realize that there may be someone in the market. doing the same thing as him.

   What did not disappoint him was that although the sell order put up by JP Morgan shocked many buyers in the market, within a few hours, the sell order was digested bit by bit by the market.

   "Although the opponent is very strong, it seems that a stronger opponent has appeared in the past few months, and has been quietly taking the opponent's sell orders!"

  After JP Morgan's sale order was digested, he thought about it for a long time, took out the paper and pen, and began to calculate seriously.

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  (end of this chapter)