On September 18, 1985, at the Chicago Mercantile Exchange.
The morning session had just opened, and the bidding phase was underway. The traders on the floor had yet to fully adapt to the day's busy schedule; many were still yawning, unaware that in the eastern hemisphere, in Hong Kong, Zhong Shi and Liao Chengde were anxiously sitting in the VIP room of a futures company, waiting for news from this side.
With the development of computer networks, these floor traders would soon disappear. The era of brokers in dark suits and white shirts, filling out quote slips at lightning speed in a noisy trading hall while on the phone, would soon be a thing of the past. However, at the moment, these industrious traders were still active on the trading floor.
Louis, Andrew's colleague, received a message from Hong Kong at around 6 a.m. Andrew had entrusted him with a large order to buy a full position in Japanese yen futures, amounting to about $1.5 million.
Louis was a typical white man, tall and energetic, with deep brown eyes that occasionally revealed unbridled ambition. In the Chicago Mercantile Exchange, a place where money was constantly changing hands, he was voraciously learning financial knowledge while fantasizing about how to start his own business.
Awakened from his sleep, Louis quickly washed his face and drove to the exchange to start his day's work. On his way to work, he was still thinking about the weekend trip to Lake Michigan with his children, completely unaware that everything that would happen today would completely change his fate.
After buying the full position in Japanese yen futures as Andrew had instructed, Louis was taken aback. He carefully examined the newly opened account and found that there was not a single short position in it.
"What the hell is going on? Don't you know about risk control?"
Muttering to himself, Louis called Andrew in Hong Kong. The phone was answered on the first ring, clearly indicating that the person on the other end had been waiting by the phone.
"How's it going? Buddy, did you buy it?"
Before Louis could even speak, he heard Andrew's voice through the old-fashioned phone. He could also hear two other voices speaking Chinese cautiously in the background.
"Hey, buddy, I was just about to ask you! Why did you buy a full position in Japanese yen futures without any risk control measures? Don't you know that this is very risky? You could lose everything!"
Louis was a conscientious trader. When he noticed something was wrong, he began to doubt whether he had misunderstood the instructions at 6 a.m. After all, at that time, the brain is still in a drowsy state.
"Relax, buddy. This is what my client requested. I did warn him about the risks, but the client is the client, and there's nothing I can do!"
Andrew's voice on the other end of the phone was full of helplessness.
"Alright, God bless this guy!" Louis, upon learning that it was the client's insistence, couldn't say much more. "Andrew, is your client Japanese? Where did he get his information?"
"Are you kidding me? My client is a Hong Kong millionaire. As for the information, I haven't heard anything. Do you have any?"
Andrew was taken aback for a moment, then realized that his old friend was joking. Given the lack of activity in the morning market, he had the time to chat with his colleague in Hong Kong.
"Of course not... Alright, I'll hang up, the market is opening!"
Louis, who was about to say more, stopped when he heard the bell and immediately began his busy day's work.
...
Zhong Shi, sitting on the sofa, could hardly resist the wave of drowsiness that was overwhelming him. He was about to fall asleep on the sofa. On the contrary, Liao Chengde, who was not directly involved, was extremely anxious, pacing back and forth, muttering to himself. If Andrew could understand Chinese, he would have heard Liao Chengde saying, "Blessed by the Great Compassionate Guanyin..."
After finishing a cup of extra-strong coffee, Zhong Shi勉强地 opened his eyes and asked, "How's it going? Did you place the order?"
"Yes, my colleague has taken care of it!"
Andrew wiped the sweat from his forehead and hurriedly replied. He was used to the time difference between Hong Kong and Chicago and had developed the habit of sleeping during the day and working at night. However, to entertain Zhong Shi and the others during the day, he had to disrupt his biological clock and was now struggling to stay awake.
In theory, there was no need for much more action now; they just had to wait for the news over the weekend, and Zhong Shi would make a fortune. However, to avoid arousing suspicion from Liao Chengde and Andrew, Zhong Shi pretended to stay at the futures company.
...
On Wall Street, in the office of Space Capital located in the Empire State Building in Manhattan, a middle-aged man with a red tie was studying the computer screen.
"More funds are entering the yen market, and the amount is not small..."
The man's eyes darted, and he shouted in a high-pitched voice, "Miller, find out the source of this funding!" He pointed to the million-dollar transaction on the screen.
Miller, a new employee, was often assigned menial tasks in large institutions, such as buying coffee, taking out the trash, and gathering information.
Miller hastily put down his work and started making calls.
"I found it, Davis. The funds came from Deep Sea Futures. According to a friend, the client is from Hong Kong."
Miller was efficient and had quickly traced the source of the funds in just a few minutes, clearly experienced in such tasks.
"Funds from Hong Kong?"
Davis stroked his smooth chin, pondered for a moment, and then whispered, "Follow the original plan and give our Far East friends a lesson!"
He was referring to market manipulation.
Space Capital was the largest short seller in the yen futures market, holding about one-third of the short positions. Whenever the yen futures market showed signs of rising, Space Capital would quickly flood the market with sell orders, driving the price down to the limit, causing significant losses to the long positions.
This time, they planned to repeat their tactics and make a fortune in the yen market.
Each time they engaged in such activities, the people at Space Capital felt a strange sense of pleasure. It was undeniable that this was an unscrupulous hedge fund that used its capital to manipulate the futures market. This was partly due to the lax regulation by the U.S. Securities and Exchange Commission (SEC), but more importantly, the foreign exchange futures market was still new, and many were still hesitant to invest.
If the yen futures market were to crash now, Zhong Shi would suffer significant losses. He couldn't buy at the close on September 20, as this would be hard to explain and could attract the attention of the SEC, which would be a huge problem.
The SEC is an independent quasi-judicial agency directly under the U.S. federal government, responsible for overseeing and managing the securities market. Specifically, it regulates insider trading, price manipulation, and other violations of securities law.
Unlike ordinary laws, U.S. securities law operates on a "presumption of guilt." Once targeted by the SEC, one must prove their innocence, which is extremely difficult and almost impossible.
Zhong Shi was worried that if he were targeted by the SEC, he would not only lose all his gains but also be banned from the U.S. capital market for life, which would render his efforts in this life meaningless.
...
At noon, a rumor quietly spread through the market. It was said that the finance ministers of Germany, the UK, France, Japan, and the U.S. would meet over the weekend to discuss issues, though the specifics were unclear. However, it was obvious to many that the meeting would be about the exchange rates of their currencies.
Although unverified, the rumor was enough to change the trend of various currency futures in the afternoon. Indeed, as soon as the market opened, funds flooded into the long positions of the mark, yen, pound, and franc, while a massive amount of money also entered the short position of the dollar.
"What's going on?"
Looking at the rising green data (in foreign capital markets, green represents an increase, while red represents a decrease) and the continuous buy orders on the screen, Davis couldn't help but clutch his head and let out a painful groan.
Each rise in the price meant a huge loss for him. He now had to decide whether to close his positions or continue with the strategy he had set earlier.
Davis groaned, recalling the rumor from noon, and weighed the likelihood of its truth.
...
"The price of yen futures saw a sharp rise during the day but was pushed back by the shorts. It only increased by 0.5% for the day, but many analysts are optimistic about the future."
Watching the CNBC report on TV, Zhong Shi nodded slightly. He had been woken up in the middle of the night by a red-eyed Liao Chengde. The U.S. market had already closed, and although there were some fluctuations during the day, the yen futures market remained relatively stable.
"How did it go today? What were the gains?"
Zhong Shi rubbed his sleepy eyes and asked Andrew with a hint of dissatisfaction.
"Mr. Zhong, your gains today are about 8%. I'm not sure what your strategy will be for tomorrow."
Andrew carefully examined the data and then said with a smile to Zhong Shi and Liao Chengde.
"Continue holding. I won't come tomorrow. I'll show up when I need to. It's exhausting. By the way, if it falls, don't call for a margin call, just close the position, understood?"
Yawning, Zhong Shi looked around and said with dissatisfaction, "Where's the coffee?"
After Andrew, who was full of disbelief, left, Liao Chengde calculated for a long time and exclaimed, "An 8% gain, that's 800,000 dollars!" (Thank you very much for your support. If you like this book, please recommend and collect it. I am deeply grateful.)