Rebirth of the Capital Legend

Chapter 269 Internal meeting of 'FXCM International'!

Just as Su Yi was analyzing the current trend of the British pound exchange rate, fully anticipating the subsequent trend, and making new trading strategy guidance.

At the same time, in Hong Kong City, inside Mitsui Yoshitomo Investment Company, inside the main fund trading room.

Sato, who had already made an instant information connection with Godfrey, the main person in charge of Huifeng Global Asset Management Universal Hedge Fund, saw that the pound sterling exchange rate was still fluctuating and falling, and had already begun to test the 1.5320 point. At the same time, he also paid attention to the changes in the number of long and short existing orders in the pound sterling exchange rate market. He asked Godfrey: "Old friend, the short positions in the pound sterling exchange rate market are still surging. It feels like the market's long and short patterns are reversing!"

Godfrey smiled and responded, "Don't be nervous, Mr. Sato. In the financial market, the price of any underlying asset cannot continue to rise. At this time, under the large-scale counterattack of the main short-selling funds in the market, affected by the market sentiment, there will inevitably be a lot of short-term speculative longs to cover their positions, so the short-term decline in the pound exchange rate is normal.

as far as I know……

At present, the direction of the Bank of England’s monetary policy has not changed, and its public operations in the market have not stopped.

Also, about the referendum results on the 23rd of next week.

Although the main short-selling institutions in the market have exaggerated the uncertainty of the outcome, according to our preliminary survey data and the unanimous opinion of almost all officials within the British government, they all believe that the result of "Brexit" is simply impossible and that the UK will remain a core country among EU members in the future.

Therefore, fundamentally speaking, the underlying logic behind the appreciation of the pound sterling exchange rate has not changed at all.

Moreover, this is due to the short selling by the main short-selling institutions in the market.

On the other hand, the expectation gap for future appreciation of the pound exchange rate has actually widened.

Once the referendum result comes out on June 6, and everyone is sure that the "Brexit referendum" is a farce, the pound exchange rate will definitely recover rapidly. By then, let alone regaining the 23 point, even the 1.5500 point and 1.6000 point above are all foreseeable. "

"I'm not nervous," Sato responded, "but I'm a little surprised that the main short-selling institutions in the market can still hype up the logic of short selling at this time, guide the market sentiment, and continue to increase short positions on a large scale to suppress the market trend of the pound exchange rate.

Especially the current trends of the two institutions, Aberdeen Asset Management and Huayin International.

Looking at the views of Mr. Frederick, the main hedge fund manager of "Aberdeen Asset Evolution No. 1", he intends to use the tens of billions of US dollars of funds under his control to fight the British pound exchange rate.

And Huayin International entered the market at this time...

Based on my past dealings with Huayin International, it is clear that this international financial investment institution with Chinese state-owned capital is very conservative in its investment strategy. I never thought that this institution would cooperate with Huayi Capital, which is deeply involved in the market, and openly short the British pound exchange rate at this position. "

"This is indeed a bit unexpected." Godfrey said, "It seems that Mr. Su from Huayi Capital should not be underestimated. He was able to persuade Aberdeen Asset Management and Huayin International to jointly short the pound exchange rate. His influence is really extraordinary.

But...

The trend of the pound exchange rate changes and the underlying logic remains unchanged.

I think the concerted counterattack by the main short sellers at this time and the sharp increase in short positions caused by the continued increase in short positions are actually good things. "

"It's actually a good thing?" Sato was slightly stunned. "How do you mean?"

Godfrey responded: “The heavier the short positions in the market, the greater the pressure on the shorts will be if the longs in the market continue to make consistent long squeezes.

Moreover, the larger the short positions in the market.

In the future, the market will have more room for the market to move when short sellers are forced to stop losses and cover their losses, and the higher the expected returns we can get will be. "

"The premise of your hypothesis..." Sato paused and said, "We have to destroy the short-selling forces in the market."

Godfrey said: "With the June 6 referendum day approaching, and the Bank of England's further open market operations, as well as the increase in positions and short squeezes by you, me, and other long institutions in the market, when everyone fully understands that the 'Brexit referendum' is a farce, and fully understands that in fact, both other EU countries and the British economy cannot be separated from the entire EU system, and the vast majority of British government officials will further resolve this round of Brexit crisis, the continuous short squeeze of longs and the forced stop loss covering of the main shorts in the market are all foreseeable things.

Also, I wonder if Mr. Sato noticed...

Although in the past two days, with the counterattack of the main short-selling institutions in the market and the covering of short-term long positions in the market, the market's long and short forces briefly leaned towards the short side.

However, in terms of the number of newly added long and short orders.

As short positions in the market increase, long positions in the market are also in a continuous increasing trend.

This shows that the new bullish force in the market is still continuing to increase.

And, as far as I know.

The hedge fund products managed by Mr. Yabuk of Pacific Capital and the fund products with a scale of tens of billions managed by Ms. Andrea of ​​UBS International are also continuously increasing their long positions in the pound exchange rate.

"Really?" Sato heard Godfrey say that Pacific Capital and UBS International, two global institutions, were still increasing their long positions in the pound exchange rate. His originally wavering confidence became firm again, and he responded with a smile, "It seems that these major short-selling institutions in the market are really at the end of their rope and are making their last attempt. Okay... since the chips on the long-short table are piling up, I have to follow suit and take a gamble."

"Mr. Sato is wise." Godfrey said with a smile, "With the current accumulated short positions in the market, once the short positions collapse and start to trample on each other, it will at least cause the pound exchange rate to fluctuate by more than 3000 points. And 3000 points... is enough for all of us to make a lot of money."

Sato nodded slightly, already looking forward to that scene in his mind.

After a brief discussion between the two...

Sato came to his senses and told Yamamoto Kyuichi to lead the trading team in the trading room to continue to increase their long positions in the pound exchange rate. "Mr. Sato... why don't we wait a little longer?" Yamamoto Kyuichi said, "At this moment, it seems that the short-selling force has not been fully released in the market trend. Judging from the short-term trend, the pound exchange rate still needs to continue to fall back to 1.5300 points."

Sato thought for a moment and said, "As long as the underlying logic is correct, you don't need to worry too much about the spatial positions of a dozen or twenty points."

"Okay." Yamamoto nodded.

He then gave instructions to the trading team members behind him to continue increasing their long positions.

And accompanied by the continued investment of bulls and bears in the market.

At 2 pm, the number of open long and short positions in the pound exchange rate market once again hit a recent high and was approaching a 10-year high.

"My God, the number of long and short positions in the pound exchange rate market is still increasing."

Seeing that the number of long positions in the pound exchange rate market had exceeded 250 million again, and the number of short positions was approaching 180 million, Angus, the risk monitor in the risk control department of FXCM International headquarters, was shocked and hurriedly reported to Hubert, the manager of the risk control department: "Manager, the number of long and short positions in the pound exchange rate market is still increasing sharply. If this continues... the probability of an extreme market risk will increase, and the market fluctuations will become more and more intense. I'm afraid our organization will have to further control the risks."

"The referendum on June 6 is approaching, and the recent market operations and monetary policy expectations released by the Federal Reserve and the Bank of England have led to more and more market speculators pouring into the pound exchange rate market for speculation." Hubert said, "Alas... it seems that extreme market conditions are certain to occur in the pound exchange rate market. I just don't know whether this round... will cause long positions to be forced to liquidate or short positions to be wiped out."

"It looks like there's a greater chance of extreme upward movement in the pound," Angus said.

Hubert smiled and responded: "Whether the extreme fluctuations of the pound exchange rate are upward or downward, it is a risk for our trading platform institutions. Take a look...Among all the clients' positions in our institution, are they net long positions or net short positions?"

Angus replied: "No need to look at it. Among our agency's current client positions, the net long position, although it has declined compared to two days ago, is still as high as 12.3 lots."

"Long exposure risk." Hubert frowned slightly and said, "It seems that we have to further restrict customers from opening positions in the 'pound exchange rate' trading product. With 12.3 long positions, if the subsequent pound exchange rate suddenly collapses and falls, causing an extreme downward trend, it only takes 3500 points of space, and our company will most likely go bankrupt completely."

"Can we hedge the risk of long exposure by establishing the same 12.3 short positions using proprietary funds?" Angus asked.

Hubert responded: “If our institution is betting against the trading clients, then of course it is possible, but this is not the case at present. If we use our own funds to establish the same short position hedging, then…what if the subsequent trend of the pound exchange rate is an extreme upward fluctuation?
Then the 12.3 short positions we hold for hedging risks will face the situation of liquidation.

As for the 12.3 long open positions opened on our platform, all profits must belong to the clients and have nothing to do with us. "

"Ah..." Angus sighed and said, "It seems that... the only solution we can use is to continue to restrict customers from opening positions on the pound exchange rate."

Hubert nodded slightly, and then quickly found Isaac, the company's president of marketing.

Another internal meeting was held under the chairmanship of Isaac.

"Continue to restrict customers from opening positions?" Salina was furious when she heard Hubert's proposal. "Then should we also reduce the performance evaluation of our department?"

"This is to prevent the recurrence of the 'Swiss franc black swan' incident." Hubert said, "Ms. Salina, I am not targeting your department. As for the accumulated long and short positions in the pound exchange rate market, I think what we should consider at this stage is how to prevent extreme risks, rather than winning over customers."

"Haha..." Salina sneered, "That's easy for you to say. The performance of the client department has nothing to do with you. You can say that. Anyway, I don't agree with the proposal to continue to increase the margin ratio and further restrict customers from opening positions in the pound exchange rate market."

"Sibel, what do you think?"

Isaac, president of the marketing department, turned his attention to Sibel, manager of the trading department.

Xi Beier thought for a moment and said, "Based on the analysis of various aspects of the current market information, the pound exchange rate is at a historical low, and the probability of extreme downward fluctuations is not high. In addition, we have increased the margin ratio for customers to open positions in the pound exchange rate market. At the same time, we have also strictly monitored the capital dynamics of customer trading accounts and set extremely strict forced stop-loss liquidation rules. In general... extreme risks have been limited by us.

Due to the previous restrictions on opening positions and the regulations on increasing margin.

Recently, the number of new clients of our institution has been declining year-on-year. At this time, if we continue to increase the margin ratio and further increase the stop-loss liquidation line, it will cause strong dissatisfaction among customers.

After comprehensive analysis, I think that Manager Hubert's proposal will do more harm than good to the development of our company's marketing department, and I do not agree with it."

"Okay." Isaac, the president of the market business department, nodded slightly, thought for a moment, and rejected Hubert's proposal. "Then we will follow the previous trading rules. However, the risk control department and the trading department must be alert during this period and pay attention to abnormal market fluctuations. At the same time, they must pay attention to the margin situation of many customers."

"Okay." Several people nodded in response.

Hubert felt somewhat uncomfortable when he saw that his proposal was rejected.

But since the company has passed the resolution at an internal meeting, he has no way to change it. He can only follow Isaac's opinion and pray that the direction of the subsequent extreme market conditions in the pound exchange rate market will be bullish.

And it seemed his prayers were answered.

After an internal meeting at FXCM International...

When the market trading time once again shifts to the European trading session.

The pound exchange rate market, which was temporarily suppressed by short sellers, has once again seen extremely volatile market fluctuations.

The pound sterling exchange rate rose rapidly at the beginning of the European session, jumping from around 1.5300 points to the 1.5350 point mark. In less than half an hour, it recovered 50 points and restored the confidence of investors with long positions in the market.

(End of this chapter)