A “local tyrant” futures trader paid 55.1053 million yuan to the listed company, which has aroused heated discussion in the market!
On January 27, the listed company Jinzi Ham Co.Ltd(002515) issued an announcement on the progress of commodity futures hedging business. The announcement said that at the end of August last year, the company bought the four month contract in the hedging process of pig futures. One month later, due to the continuous decline of the market, the futures traders of the company closed the positions of the contracts without authorization, resulting in a total loss of 55.1053 million yuan in the company’s account.
According to the relevant rules and regulations of the company, Jinzi Ham Co.Ltd(002515) company requires futures traders to bear all responsibilities, and on September 30, 2021, the company received 55.1053 million yuan paid by futures traders. However, after receiving the compensation funds from traders, the company did not conduct accounting treatment for investment losses and compensation income, and included the compensation in the recovered futures principal.
involves futures hedging, Jinzi Ham Co.Ltd(002515) disclose the specific trading process
According to the announcement on the progress of commodity futures hedging business issued on Jinzi Ham Co.Ltd(002515) January 27, the company has a complete process of entering the futures market to participate in hedging.
In the first step, the 10th meeting of the 5th board of directors was held on January 11, 2021. The proposal on developing pig futures hedging business, internal control system of commodity futures hedging business and other proposals were considered and passed, and it was agreed that within one year from the date of deliberation and adoption by the board of directors, The company carries out commodity futures hedging business with its own and self raised funds within the limit of 50 million yuan (excluding the physical delivery of the subject matter of futures).
The second step is to open a futures account on March 16, 2021.
In the third step, after comprehensively considering the risks, the futures decision-making group decided that the company would gradually buy the pig futures hedging contract in August 2021, with a margin of less than 50 million yuan.
Step 4: at the end of August 2021, futures traders operated the company’s account to buy four bullish contracts of pigs one after another. The company’s account began to build positions from about 17000 yuan / ton to about 15000 yuan / ton.
Step 5: at the beginning of September 2021, the company decided to make physical delivery of all pig futures contracts held by it in the later stage, and supplemented part of the margin (the maximum margin is 70 million yuan).
Step 6: from the middle of September 2021, the price of pig futures continued to fall sharply. Due to excessive pessimism about the future market, the company’s futures traders closed the positions of the contracts without approval, resulting in a total loss of 55.1053 million yuan in the company’s account.
Step 7: as of September 30, 2021, the company has received 55.1053 million yuan paid by futures traders. Since then, the company has not carried out futures business.
floor price “cut meat and leave the market”. The company accused traders of closing their positions without authorization and demanded compensation of 55.1 million
” Jinzi Ham Co.Ltd(002515) as a raw material demand unit, the company’s purchase of pig futures hedging contract is reasonable and no problem.” Said a general manager of the business department of Yong’an futures company.
According to the disclosure of Jinzi Ham Co.Ltd(002515) company, the futures decision-making group comprehensively considers various factors such as the recovery degree of Chinese pig production capacity, market situation, future pig price trend and the company’s pork purchase plan in 2021, in order to strengthen the control of the company’s product cost and product sales price and effectively avoid the risks caused by the price fluctuation of raw materials and inventory products in production and operation activities, The company gradually bought the hedging contract of pig futures in August 2021, with a margin of less than 50 million yuan.
From the situation at that time, the price of pig futures has been sideways for about two months. With the advent of the peak consumption season at the end of the year, the company is worried about the fluctuation of raw material prices.
At the end of August 2021, futures traders operated the company’s accounts to successively buy bullish contracts for pigs 2111, 2201, 2203 and 2205. The company’s accounts began to build positions from about 17000 yuan / ton to about 15000 yuan / ton. During this period, the lowest price of pig futures fell to about 13000 yuan / ton.
From mid September 2021, the price of pig futures continued to fall sharply. From the historical chart, the periodic low point of that round of decline was the intraday low on September 24, the lowest point of 2201 contract was 13365 yuan / ton, the lowest point of 2203 contract was 13100 yuan / ton, and the lowest point of 2205 contract was 14210 yuan / ton. At that time, the 2111 contract hit a new low of 11415 yuan / ton after the new low of 11880 yuan / ton on September 24 and September 30. Then after the national day, There was a turning point in the market and began to rise all the way.
Obviously, from the establishment of positions at the end of August to the closing of positions at the end of September, during the operation of one month, the price of pigs continued to fall. As a buyer holder, futures traders experienced a panic stage of shrinking funds and finally “cut meat and leave the market” at the floor price.
For Jinzi Ham Co.Ltd(002515) company, at the beginning of September, the company decided to make physical delivery of all pig futures contracts held in the later stage, and supplemented part of the margin (the maximum margin is 70 million yuan). In this case, the company’s futures traders closed their positions without authorization, resulting in a total loss of 55.1053 million yuan in the company’s account.
“There are still problems of directionality and exposure risk control. More importantly, the system is not perfect. Since there is a physical delivery plan, there is a problem of traders closing positions, and there are still institutional loopholes.” The general manager of the business department of Yong’an futures company said that this can at least show that the responsibilities of traders are not clear, and the decision-making authority of traders needs to be further clarified and supervised. One person cannot take full responsibility. From the aspects of hedging scheme planning, order issuance, order execution and subsequent re order, each link needs to be specific and clear about the division of responsibilities. In the face of huge market fluctuations, we can’t rely on traders to dominate the world alone. We need to rely on a set of normative system constraints to make it stable and far-reaching.
According to the previous announcement of the company, Jinzi Ham Co.Ltd(002515) ‘s “futures decision-making group” members include the chairman, President, vice president, person in charge of procurement, person in charge of finance, person in charge of internal audit, etc; The board of directors authorizes the chairman to take charge of futures hedging business and act as the head of the “futures decision-making group”. The company sets up a “futures working group” to be responsible for specific implementation and operation.
the financial department is engaged in Oolong again, and the compensation is included in the recovered futures principal
It is worth noting that at the end of September last year, Jinzi Ham Co.Ltd(002515) company did not account for investment losses and compensation income after receiving compensation funds from traders.
The announcement said that the management and financial personnel of the company mistook the compensation as the principal of futures hedging and included it in the recovered futures principal due to the deviation in the understanding of the accounting standards related to hedging and lack of experience in its operation. They did not account for the investment loss and compensation income, so they did not disclose it in the third quarter report.
Subsequently, Jinzi Ham Co.Ltd(002515) the company will correct the disbursement of relevant accounting items in the third quarter report of 2021 in accordance with the accounting standards for business enterprises. However, the correction of the above accounting errors only affects the “investment income”, “operating profit” and “non operating income” in the “consolidated income statement”, and does not involve retroactive adjustment and affect the total profit and net profit in the consolidated income statement.
In addition, Jinzi Ham Co.Ltd(002515) said that the matter would not cause losses to the company, would not affect the company’s daily business activities, and was not expected to affect the company’s net profit in 2021. For the occurrence of this matter, the company sincerely apologizes to the majority of investors. After that, the company will strengthen the training of relevant laws and regulations and internal control system, further strengthen internal control, strengthen internal audit supervision, improve the standardization level of information disclosure and improve business ability.
