May 20, 2020 08:48 PM

Banking Regulator Opens Investigation Into ‘Paper Crude’

What’s new: China’s top banking regulator has opened a formal investigation into a Bank of China Ltd. (BoC) crude futures trading product which produced heavy losses for investors as oil futures crashed in April, according to (link in Chinese) Financial News, a state-owned media outlet managed by the central bank.

What’s the background: Some 60,000 Chinese investors lost about 10 billion yuan ($1.4 billion) last month on Yuan You Bao, a “paper crude” investment product linked to West Texas Intermediate futures, Caixin previously reported. Some of them tried to buy into a dip in crude futures, only to watch prices plunge deep into negative territory. Investors blamed BoC’s poor risk management and product design flaws for their losses.

BoC has agreed to shoulder some of their losses and return 20% of initial investments to clients who invested less than 10 million yuan.

Quick Takes are condensed versions of China-related stories for fast news you can use.

Related: In Depth: A Bitter, $1.4 Billion Lesson on Commodity Price Speculation

Contact reporter Guo Yingzhe (

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