In fact, the ones who are most active in the stock index futures market now are hedge funds and the proprietary trading departments of major investment banks. The trading method is mostly algorithmic trading, which means establishing a trading model that automatically triggers orders when market prices fluctuate, allowing for rapid transactions and profit-taking.
However, at this stage, research on quantitative arbitrage is still in its infancy. The most famous arbitrage model, "Medallion," has not yet been introduced. Most hedge funds are also unlikely to entrust hundreds of millions of dollars to a quantitative model, and not many hedge funds have such a large scale.
Those who still wield significant influence in the futures market are the major international investment banks and their ultra-high-net-worth clients with wealth rivaling that of small countries. These people have much less trust in algorithms than in the wealth management professionals of major investment banks.
Even so, there are still a considerable number of algorithmic trades in the market, especially during stock market crashes. When certain conditions in the models are automatically triggered, massive sell orders flood the market, deepening investors' panic, which is one of the reasons for later criticism.
At this moment, the aroma of hot pot filled the trading room, and all the ingredients were thoroughly cooked, but everyone had lost their appetite, only looking at Zhongshi with strange eyes.
Noticing the complex and peculiar expressions in everyone's eyes, Zhongshi, while picking out succulent beef from the hot pot, smiled and invited everyone, "This is the best time to eat hot pot. The aroma is fully released. Why are you all looking at me? Come and continue eating!"
"At the 360 level, how did you know the bulls' strategy, and it matched the facts exactly? If you weren't standing right in front of us, I would have suspected you were the one operating it!" Andrew, sitting at the table, gazed at the bubbling hot pot and said thoughtfully.
"Didn't I explain it clearly? This is a tacit understanding that has been developed over a long period of competition between bulls and bears. The purpose is to eliminate those who follow them in the market fluctuations."
"Actually, if the previous bull hadn't placed the order quickly, they would have been eliminated as well."
"From what I know, there are very few people who can dance on the edge of a knife and have such a large amount of capital. Just count the well-known financial groups worldwide, and the answer will become clear!"
"Who is it?"
Upon hearing this, everyone immediately became interested and asked one after another.
"Could it be those two investment banks?" Andrew said thoughtfully. Although he was not very familiar with their operating styles, corporate cultures, or business practices, these two banks were so famous that anyone in the financial industry knew them well.
"Exactly, it's them!"
...
In Manhattan, New York, at 85 Broadway, the headquarters of Goldman Sachs is located. Men and women in black suits, carrying black briefcases, come and go, their steps always hurried.
Looking at the towering Twin Towers in the distance, a middle-aged man in the middle floor of this brown building held a thick Cuban cigar. His handsome face was distorted by the rising smoke, and he gritted his teeth.
"Again, them! Are they really better than us?" he muttered to himself. When the people around him saw his expression, they all avoided him, even walking more lightly.
He was Ed Blanco, a senior partner at Goldman Sachs, responsible for the derivatives department. The battle in the S&P 500 in November was his strategy.
Just as he successfully rallied the bears and took the opportunity to close his short positions, Morgan Stanley suddenly emerged, not only suppressing the bears' morale but also pushing up the prices, making a substantial profit from their low-cost long positions.
"Just a few seconds off, is it really insurmountable?" Thinking of the scene, Ed was furious. In fact, they had also placed long orders, but they were slightly inferior in timing and price, allowing Morgan Stanley to take the lead.
Actually, as the main force in the previous short-selling, Goldman Sachs had also made a lot of money. However, on Wall Street, where greed is considered a good thing, who would complain about making too much money!
In the 1970s and 1980s, Wall Street investment banks were synonymous with Morgan Stanley, and Goldman Sachs was just one of the major players, far from the position of the top investment bank in the future. They were not only behind Morgan Stanley but also behind Merrill Lynch, Lehman Brothers, and Salomon Brothers.
It was through the privatization in Europe that Goldman Sachs gradually caught up in mergers and new stock issuances. In fact, the European privatization was due to the overly stringent conditions set by some countries, and Morgan Stanley, considering the risks, did not take on these deals, giving Goldman Sachs an opportunity.
"Is lineage really that important?" Ed thought of these past events and felt a deep resentment. The British government initially considered the Morgan Group, which had close ties with them, rather than other investment banks with a century-long history.
In the 1980s, Morgan Stanley's business stagnated for a period, forcing them to lower their standards and change their aristocratic nature, becoming a ruthless money-making machine. When they served as financial advisors for hostile takeovers, the entire Wall Street exclaimed, "The gentle, confident Morgan Stanley has become a reckless, aggressive company."
In 1979, IBM had a $1 billion bond issue, the largest industrial loan in history at the time. IBM required Morgan Stanley to co-lead the underwriting with Salomon Brothers, but all the partners at Morgan Stanley unanimously rejected this requirement, and IBM did not budge. As a result, Salomon Brothers led the bond issuance, marking a milestone in Wall Street history and breaking Morgan Stanley's golden chain.
To retaliate against IBM, Morgan Stanley brought its competitor, Apple, into the stock market.
Moreover, Morgan Stanley changed its conservative style and entered the market in a very aggressive manner. They became the leader in hostile takeovers, made junk bonds respectable, and even issued leveraged buyout funds, more than one, involving institutions such as General Motors, Japanese trust funds, and Middle Eastern financial groups.
Meanwhile, Goldman Sachs, which had a poor reputation, began to build its own reputation while Morgan Stanley was destroying its own by leading hostile acquisitions.
On July 4, 1974, Morgan Stanley represented INCO in a hostile takeover of ESB, the world's largest battery manufacturer, at $20 per share. The ESB boss, in a desperate situation, urgently sought advice from Goldman Sachs. With Goldman Sachs' help, INCO finally succeeded in the acquisition at $41 per share.
Subsequently, Goldman Sachs announced that it would not serve hostile acquirers. This public commitment had a positive impact on Goldman Sachs, and companies fearing hostile takeovers turned to Goldman Sachs as a lifeline.
With its strong development momentum, Goldman Sachs became one of the most influential companies on Wall Street, even slightly surpassing other investment banks.
However, in the fastest-growing fixed-income securities and derivatives business in the 1980s, Goldman Sachs still could not match its competitors. On one hand, Goldman Sachs failed to foresee and prepare for these businesses, and on the other hand, they were concerned about the high risks and did not actively develop them.
It's no wonder they frequently lost to their strong competitor, Morgan Stanley, in the futures market.
At this moment, in the World Trade Center, Morgan Stanley's derivatives department was celebrating, clapping and cheering. By buying low and then using massive funds to push up prices, Morgan Stanley's account saw a sudden addition of millions of dollars in profit.
Most importantly, they had defeated their old rival, Goldman Sachs, in the market.
As high-level players in the financial industry, Morgan Stanley and the rapidly growing Goldman Sachs undoubtedly had a rivalry. They competed in various fields, but in derivatives, Morgan Stanley's department had a clear advantage.
"That's strange, they usually don't invest much in the derivatives department. Why such a big move today?" Sargent also lit a cigar, looking in the direction of Goldman Sachs' headquarters, and muttered to himself.
"Could it be?" Sargent frowned and shouted at the traders who were still celebrating, "Has anyone noticed the movements of the Japanese financial groups recently?"
"Sir, the Japanese financial groups have shown a trend of reducing their investment in the stock market and increasing their hedging efforts. It seems they have realized the stock market bubble, but they are a bit too late in withdrawing!" A bespectacled, somewhat dull-looking employee said.
Sargent recognized him. His name was Mark Laurent, a trader who had just joined the derivatives department this year. He seemed to have a natural talent for numbers, making him very adept in the derivatives market. In just half a year, he had become one of the most profitable traders in the department.
"Is there a possibility that the Japanese financial groups have entrusted Goldman Sachs to manage their funds in the futures market to reduce risks?" Sargent frowned, thinking of a possibility.
"That's unlikely. The Japanese financial groups have their own dedicated seats and channels. If they were to entrust others, wouldn't it be redundant? Besides, there are many experts in the Japanese financial groups. Even if they entrusted Goldman Sachs, it would only be a small part of them."
The speaker had an East Asian face. When he first arrived, his white colleagues generally mistook him for a Japanese person, but he was a genuine Chinese person named Jiang Min, also one of the most profitable traders in Morgan Stanley's derivatives department.
"Continue reducing positions, remain bullish, and gradually transfer funds to the December contract." Sargent thought for a long time but still had no clue, so he gave these instructions. (Please click, recommend, and collect)
</a><a>Mobile users, please read at .</a>