Zhongcai Futures' Bian Ximing accused of precise short selling, earning 3.6 billion in three days. How does the company respond?

Amid recent sharp fluctuations in silver and other precious metal futures, a rumor has been circulating in the market claiming that “Bian Ximing of Zhongcai Futures precisely shorted silver, earning 3.6 billion in three days.”

In response, a relevant person from Zhongcai Futures told the media that the position data and changes in Zhongcai Futures’ trading seats on silver futures contracts published by the exchange reflect the company’s clients’ position changes in silver futures.

However, some industry insiders have stated that this is a rumor that is difficult to verify or disprove. Cailian Press has reviewed past data in an attempt to restore the true story.

Shorting by Zhongcai Futures?

The rumor mentions Zhongcai Futures’ short positions, mainly based on the company’s position data. It claims that, according to data disclosed by the Shanghai Futures Exchange, as of February 2, the company held short positions in silver futures, and the corresponding nominal value was calculated.

In fact, the Shanghai Futures Exchange’s official website discloses daily rankings of the top twenty members/overseas participants by trading volume and open interest for various contracts. As of February 5, Zhongcai Futures still appeared among the top sellers in many Shanghai silver futures contracts. For example, in contracts 2608, 2610, and 2612, this member was among the leading sellers.

However, every list containing the keyword “Zhongcai Futures” is marked with “(Agency)”.

A reporter from Cailian Press learned from industry insiders that the disclosures on the ranking lists do not represent Zhongcai Futures’ proprietary trading positions but are a summary of all client holdings. “Futures companies provide trading services to their clients through their seats, so this does not represent individual or company trading positions.”

In other words, these data more likely indicate that Zhongcai Futures’ clients collectively hold large short positions, but cannot be attributed to individual traders.

Is there evidence of shorting?

While it cannot be directed at individuals, the fact that multiple contracts rank high in sell volume does suggest the existence of short positions. According to the rumor, this short-selling operation began in late January, and since last Friday, as silver prices turned, this operation has been profitable.

Based on previous data from Shanghai silver futures, on January 20, Zhongcai Futures (agency) only appeared in the position ranking for contract AG2606, holding 1,757 short lots at that time.

A week later, on January 27, this seat appeared in the position rankings for contracts AG2602, AG2604, AG2606, and AG2608, mainly as a top seller, with a total sell volume of 11,500 lots across four contracts.

On January 28, in addition to the four contracts mentioned, the seat also held a large short position in contract AG2610, with a total sell volume of 18,700 lots across five contracts.

On January 29, the seat added another contract, AG2612, which also had high trading volume; Zhongcai Futures (agency) held over 25,000 lots in total across these contracts.

On January 30, the seat only appeared among the top sellers in contracts AG2604, AG2606, AG2608, AG2610, and AG2612, with a combined sell volume of 28,600 lots. That day, Shanghai silver futures began to decline.

On February 2, Shanghai silver futures continued to decline, with the main contracts hitting the limit down. On that day, Zhongcai Futures (agency) held a total of 32,300 lots in the aforementioned contracts.

On February 3, Zhongcai Futures (agency) still held over 30,000 lots in sell orders, but the amount decreased compared to the previous day. Positions in contracts AG2612, AG2610, and AG2608 were reduced. Silver futures continued to decline that day.

On February 4, silver futures rebounded somewhat, and the number of sell orders held by Zhongcai Futures (agency) that day changed little from the previous day. As of February 5, Zhongcai Futures (agency) still ranked among the top in multiple contracts, with a total sell volume of 37,400 lots. Silver futures closed lower that day.

Earned over 3.6 billion RMB in three trading days?

According to the rumor, this round of short selling earned over 3.6 billion RMB within three trading days since January 30. However, due to unclear holding costs, the exact profit cannot be calculated, and this does not represent the positions of the company itself or any single client.

Wind data shows that from January 30 to February 3, during these three trading days, the main contracts of Shanghai silver futures fell by a total of 27.88%, with a decrease of over 8,200 RMB per kilogram.

Since each lot of Shanghai silver futures is 15 kilograms, combined with Zhongcai Futures (agency)'s short position of about 30,000 lots, this may have been misinterpreted as 3.6 billion RMB in profit.

Is Bian Ximing the beneficiary?

The rumor points to Bian Ximing of Zhongcai Futures as the beneficiary of this round of short trading, claiming he is the founder of Zhongcai Futures. In fact, Zhongcai Futures’ predecessor was Shanghai Hongda Futures, established as early as 1995; it was renamed Zhongcai Futures in 2003, at which time, following changes in shareholders, Zhongcai’s business expanded into the shareholder ranks, and the legal representative was also changed to Bian Ximing.

After several shareholder changes, Zhongcai Futures’ official website shows that it is now a wholly owned subsidiary of Zhongcai Industrial Development. Public information indicates that Bian Ximing is the actual controller of Zhongcai Group, which initially focused on manufacturing chemicals, building materials, and pipelines. Zhongcai Profiles was once a major brand in China’s plastic profiles industry. Later, the group diversified, and Zhongcai Futures’ official site lists eight major business segments: Zhongcai Chemical Building Materials, Zhongcai Financial Panorama, Zhongcai Futures, Zhongcai Overseas Business, Zhongcai Capital, Private Finance, Eight Financials of Zhongcai, and Real Estate Finance.

The rumor mentions that Bian Ximing has had multiple successful bets on futures markets involving gold, copper, and other commodities. However, based on the above explanations of seat holdings, it remains impossible to verify the actual owners behind these positions.

(Source: Cailian Press)