However, even though all market maker institutions and bank trading institutions restricted the opening leverage multiples and margin ratios for GBP long/short standard contracts in the GBP exchange rate market, this did not prevent numerous short and long institutions from continuously pouring into the GBP exchange rate market, nor did it stop more and more individual speculators and hot money from entering the market.
With the opening leverage multiples in the GBP exchange rate market restricted.
As market trading hours continued to advance, the long and short positions in the market still showed an increasing trend, and net long positions still maintained a dominant position.
"Mr. Su, our institution's current short positions have reached 120,000 lots."
On Monday, June 13th, inside 'Huayi Capital' company, in the 'Huayi Chengyuan No. 1' hedge fund trading room, Qu Zecai, as the trading team manager, gazed at the fund position details on the main computer and reported to Su Yi,
"Our total position loss has reached 310 million USD, with a total investment of 450 million USD. Currently, there is 550 million USD in available funds in the fund account, and the risk is still within a controllable range."
"Okay."
Su Yi nodded slightly,
"Continue to increase short positions."
"However, Mr. Su…"
Hearing Su Yi's instruction, Qu Zecai paused and said,
"After major market makers restricted the opening leverage multiples for GBP exchange rate trading, if we want to add new short positions, we will have to invest much more capital than before, which will increase our new position risk."
According to the previous opening standards of exchanges, various bank trading institutions, and market makers.
Previously, to open one standard contract for a GBP short order, only required about 1,000 USD, but now, it requires at least about 5,000 USD.
The margin requirement has increased by 5 times.
This means that if they want to continue opening short positions as originally planned, the capital invested will increase by 5 times compared to before, which is a huge pressure on their existing, insufficient capital reserves.
Su Yi said,
"No worries. We still have 550 million USD in capital reserves, that's enough."
With their current short position size, 550 million USD in capital reserves is enough for them to hold until the GBP exchange rate breaks through the 1.6000 mark.
And Su Yi knew…
According to his past historical memories.
During this 'Brexit' event, the highest point of the GBP exchange rate, let alone breaking through the 1.6000 mark, it never even broke through the 1.5000 mark.
In the entire plan to short the GBP exchange rate.
He had already reserved enough safety margin for himself.
What's more, under his influence, the main short-selling institutions in the market were no longer solely dominated by him; major global asset management institutions like 'Aberdeen Asset Management', 'BNY Mellon', and 'Citigroup Investment Bank' had all entered the market and established considerable short positions, especially 'Aberdeen Asset Management's' 'Evolution No. 1' hedge fund.
According to information Su Yi received.
Frederic had already added and established over 150,000 short contracts.
"Before June 23rd arrives, let's gradually increase our institution's short positions to 170,000 lots."
A sharp glint flashed in Su Yi's eyes,
"In the recent trading days, as long as the GBP exchange rate continues to rise, you can continue to short at highs. As for the cost of opening positions, there's no need to be too concerned."
"Increase to 170,000 lots?"
Qu Zecai was slightly startled when he heard Su Yi's words.
This was 20,000 lots more than they had originally planned, and these additional 20,000 lots would require an additional 10 million USD in margin.
Su Yi nodded slightly:
"Major market maker institutions have preemptively predicted extreme fluctuations that are highly likely to occur in the market, lowering opening leverage multiples and increasing trading margin ratios.
This has essentially prevented retail investors with smaller capital from entering the market, and also created financial pressure for the long institutions that have been continuously forcing short covering on us.
Furthermore, the net long positions in the market have now reached nearly 800,000 lots. With net long positions of this magnitude. Many profitable longs will definitely take profit and close positions, covering their positions.
In other words, with opening leverage multiples lowered and trading margin ratios increased, the cost for longs to continuously force short covering will rise exponentially, and the amount of capital invested will also rise exponentially.
Conversely, as more and more longs close positions and cover. As subsequent net long positions return to a relatively reasonable stage. In the market, long power will instead continuously decline, while short power will continuously increase.
Since the market's long-short turning point is gradually approaching, then there's no need for us to maintain our previously relatively conservative trading strategy any longer."
"Is the market's long-short turning point really approaching?"
Qu Zecai asked, somewhat uncertainly.
Recently, every day he walked into the trading room, what he saw was newly added position losses of at least 10 million USD or more on the main computer screen.
Consecutive days of increasing losses, and the GBP exchange rate, which almost showed a one-sided upward trend.
had left him with very little confidence in firmly shorting the GBP exchange rate.
If Su Yi hadn't remained full of confidence and steadfastly instructed them to continue shorting the GBP exchange rate at highs, continuously investing capital into the GBP exchange rate market.
With his cautious trading style.
he would certainly not have been able to withstand the psychological pressure at this stage and would have directly stopped loss, closed positions, and covered.
Even if he didn't close positions and cover, he would certainly not choose to do as Su Yi did, to continue shorting the GBP exchange rate at highs and further expand his short positions.
After all, continuing to increase short positions.
Once the GBP exchange rate breaks further upwards.
What awaited them would be rapidly expanding position losses.
This would quickly push them closer to an even more dangerous long squeeze situation, and would also make their position risk far greater than it currently was.
"Mr. Su…"
Su Yi smiled.
Before he could answer, Wang Huaijin hurriedly pushed open the trading room door and walked in.
Seeing his urgent expression, Su Yi couldn't help but glance at the time, noticing it was already 4:47 PM and the market had entered the European trading session.
He then asked,
"Is there new market news from the UK across the ocean?"
Wang Huaijin nodded and replied,
"According to the information I gathered, the Bank of England has decided to further sell USD and buy back GBP in the market to stabilize the GBP exchange rate, and will also conduct corresponding market operations to boost public confidence in the GBP market."
"It seems this is to hedge against extreme situations that might arise during the June 23rd referendum."
Su Yi frowned slightly after hearing Wang Huaijin's words and said,
"However, the Bank of England doing so much also fully indicates that the referendum results carry a certain degree of uncertainty, and this underlying concern is enough for the market."
"Mr. Su, do you think…"
Qu Zecai thought for a moment and said,
"Is this news that seems bullish for the GBP exchange rate, but is actually bearish for it?"
Su Yi nodded and said,
"Indeed."
As he spoke, he immediately turned his gaze to the GBP exchange rate market.
In just the brief conversation between the two, the market trend of the GBP exchange rate had already surged then quickly pulled back, with a fluctuation range of 30 points in just 5 minutes.
Wang Huaijin saw the calm expression still on Su Yi's face and also observed the surge and pullback of the GBP exchange rate.
His originally tense and anxious emotions finally relaxed.
He let out a light sigh of relief and said,
"Good, good… I thought this news would trigger another big loss for us."
"Current losses are sources of future profits."
Su Yi smiled and continued,
"If you can't bear huge losses, you won't be able to reap huge profits. You guys… don't worry, there's plenty of smart money and smart people in the market. Many people can see through the Bank of England's calculations, and a calculation that can be seen through, a benefit that can be anticipated, cannot influence the market's trend development and its outcome."
"I don't understand trading matters."
Wang Huaijin said with a smile,
"But I believe in Mr. Su."
"All of us also firmly believe in Mr. Su."
Qu Zecai echoed.
Su Yi nodded slightly and asked again,
"Are there rumors outside recently that our institution is close to liquidation? Are there rumors that I'm about to be ruined?"
Wang Huaijin hesitated for a moment and replied,
"Recently, there have indeed been many rumors about our company and about Mr. Su… Some people's words are indeed unpleasant."
Su Yi said,
"It doesn't matter. The more such rumors there are, the more advantageous it is for us. The more it makes the long institutions forcing short covering think we are about to liquidate, think they are one step away from forcing us to cut losses, cover positions, and exit, think they are one step away from crushing the shorts and forcing the main short players in the market into a stampede, then the more reluctant they will be to leave the market, and the deeper they will fall into the trap of this long-short battle."
And just as Su Yi expected…
At a time when the flagship fund 'Huayi Capital Chengyuan No. 1' managed by him was still firmly increasing its short positions.
As institutions on the opposite side of his trade.
In the trading rooms of institutions such as 'Mitsui Sumitomo Investment Company', 'Tianhe Capital', and 'Huifeng Huanyu No. 1 Hedge Fund', a group of fund managers and institutional traders who had received insider information, while their floating profits continued to expand, were also continuing to increase their long positions at high levels.
"Mr. Godfrey, the GBP exchange rate has already touched the 1.5420 mark today."
In the trading room of 'Huifeng Huanyu No. 1 Hedge Fund', Gerald, as the core trader, said excitedly:
"According to the current position of the GBP exchange rate, the current position loss of 'Huayi Capital', this major short institution, should have exceeded 350 million USD, right? If calculated based on this institution's maximum reserve capital of 600 million USD, it is estimated that available funds are already less than 100 million USD."
Godfrey smiled and nodded, saying,
"According to various aggregated market information, 'Huayi Capital', this short institution, should be unable to withstand the pressure any longer."
Gerald said,
"It feels like as long as the GBP exchange rate breaks through the 1.5000 mark, this short institution will definitely be liquidated. And the liquidation of this major short institution will inevitably trigger a chain reaction among other short-holding institutions in the market, causing a short covering stampede, and more longs taking the opportunity to force short covering."
Godfrey said,
"It's less than 100 points away. With the Bank of England continuously releasing bullish news, it is estimated that this week we will see the GBP exchange rate break through the 1.5000 mark, and also witness the tragic slaughter of Mr. Su from 'Huayi Capital' by the market."
Gerald said,
"I'm really looking forward to it! I really want to see Mr. Su's discomfited look in person and see if he can still be as arrogant as he was at the party back then."
Just as Gerald was looking forward to the liquidation of the 'Huayi Chengyuan No. 1' flagship fund managed by Su Yi.
And the fall of Su Yi, the financial rising star hailed as the 'God of Stocks in China'.
A candid photo of Su Yi looking haggard, wandering aimlessly in slippers on the side of his residence at the Peninsula Hotel, began to spread wildly online.
At the same time, various rumors about the 'Huayi Capital Chengyuan No. 1' flagship hedge fund managed by him, with losses approaching 400 million USD, exhausted reserves, and on the verge of liquidation, also started to spread wildly in mainland China, Hong Kong, and international financial circles.
And the wild spread of such news…
further caused in the market, numerous long capital funds, hunting 'Huayi Capital Chengyuan No. 1' flagship fund, to further massively invest capital to force covering, continuing to use huge amounts of capital to push up the GBP market exchange rate.
Meanwhile, it also prompted allies in Su Yi's camp and friends who cared about him to inquire eagerly.
"Mr. Su, the market rumors aren't true, are they?"
On the night of June 13th, when the GBP exchange rate continued to surge after an intraday pullback and decline, breaking through the 1.5400 barrier.
Mr. Frederic, manager of 'Aberdeen Asset Evolution No. 1' flagship hedge fund, hurriedly called Su Yi,
"If your institution is forced into liquidation, then in the GBP exchange rate market, we might not even wait until the June 23rd referendum, and short institutions, including us, will be butchered by the numerous longs in the market."
Su Yi responded with a smile:
"Of course it's not true; this is just bait I released. Mr. Frederic, have you read a famous book on military strategy from our China called 'Sun Zi's Art of War'? Do you know the saying 'to catch something, first let it go'?
No matter what, you always have to give the longs hope; you have to make them feel they are just one step away from complete victory, from completely crushing the shorts and causing the shorts to fall into a self-inflicted stampede."
"To catch something, first let it go?"
Frederic pondered for a moment, roughly understood Su Yi's meaning, and said,
"Mr. Su is truly a master of trading operations, using himself as bait to lure longs into investing more huge capital to force short covering, thereby getting deeply trapped and unable to extricate themselves. This strategy is truly brilliant."
Su Yi said,
"At this moment, most long institutions have quite a bit of floating profit in hand. Wait until these long institutions see the largest piece of the profit cake dangling right before their eyes, that with just a little effort and a bit more capital investment, they can swallow this huge cake, then these guys won't easily take profit and exit.
Only by dragging these massive long positions until the arrival of the June 23rd referendum can we create extreme volatility in the GBP exchange rate, and then there will be huge profits to harvest."
Frederic said with a smile,
"Mr. Su is truly ingenious."
Upon hearing Su Yi's words, his confidence in the future was clearly strengthened.
Moreover, after he thought back carefully for a while, he was shocked to realize, it seemed that ever since the 'Huayi Chengyuan No. 1' flagship fund managed by Su Yi intervened in the GBP exchange rate market and aggressively began shorting the GBP exchange rate, the entire long trap had already been set, just waiting for countless long institutions worldwide to fall into it.
Regarding this speculation, the more he thought about it, the more astonished he felt.
After Su Yi finished his call with Frederic, he was about to go to sleep.
Unexpectedly, Fang Wanqing also called at this moment.
"Are you… are you alright?"
Fang Wanqing asked with concern over the phone,
"I've looked at the GBP exchange rate trends; the longs have already formed an absolute crushing advantage. And the matter of Mr. Frederic, manager of our company's 'Evolution No. 1' flagship fund, aggressively shorting the GBP exchange rate and secretly collaborating with you, has already incurred the dissatisfaction of many senior executives in the group's asset management business division.
It is estimated that in the future, Mr. Frederic's 'Evolution No. 1' fund will be restricted from opening new GBP short positions. Once Mr. Frederic's 'Evolution No. 1' flagship fund starts covering positions to stop losses.
Su Yi… your situation will become even more dangerous. Originally, short-selling power in the current GBP exchange rate market was very weak. Once shorts start a stampede, your institution's positions are very likely to face liquidation instantly.
By that time, even if you want to stop loss and cut positions, there will be no chance. I think… why don't you stop loss? It doesn't matter how much money is lost; I believe with your ability, you will quickly earn it back in the A-share market in the future. If you stop loss and exit now, you'll still have some principal left, but once liquidated, you'll have nothing.
Don't the ancients often say? Where there are green hills, there'll be wood to burn. It's still not too late to stop loss and cover positions now; don't push yourself too hard."
Su Yi listened to her rattling on with a lot of words, and was somewhat moved in his heart.
After all, at this point in time.
If she didn't genuinely care about him, she wouldn't have called him.
Su Yi said,
"Your analysis isn't wrong. But I still believe in my own judgment. And… don't believe those rumors circulating; those are all messages I had Mr. Wang deliberately release. I'm doing great now, nothing is wrong, you don't have to worry."
"Deliberately released news?"
Fang Wanqing was completely bewildered.
She didn't quite understand why Su Yi, already forced into huge losses, would still release fake news to entice the market's long forces to further squeeze positions.
Isn't this just asking for trouble?
Furthermore, the short-selling power in the market was already weak; everyone was on edge, seeing enemies in every bush.
Was he not afraid of accidentally causing short institutions in the market to stampede each other?
"Miss Fang…"
While Fang Wanqing was in a daze, Su Yi paused and continued,
"Regarding some managers or relevant leaders of state-owned asset management institutions, do you have any connections you know?"
"What do you want to do?"
Fang Wanqing asked.
Su Yi said,
"I want to continue to teach the longs in the market a lesson, I also want to add another layer of insurance for myself, and I want to persuade state-owned asset management institutions to enter the market and short the GBP exchange rate."
"You can barely protect yourself now; how can you possibly convince others?"
Fang Wanqing said.
"I have my own methods."
Su Yi said with a smile.
Fang Wanqing hesitated for a moment and said,
"It might be difficult for me to connect with leaders who have investment decision-making power at domestic state-owned asset management institutions involved in international financial markets. However… I can ask my aunt; Ms. Li should know some people. If she is willing to introduce you, then you might have a glimmer of hope."
"Then thank you very much, Miss Fang."
Su Yi said gratefully.
Fang Wanqing said,
"It's not done yet. Don't rush to thank me; I'll call you back tomorrow."
After speaking, Fang Wanqing hung up the phone.
After the call ended, Su Yi carefully pondered the subsequent plan for a while; the sharpness in his eyes became increasingly keen.
At the same time, he also realized that the prelude to this long-short battle, initiated by him, was finally about to fully unfold.
(End of Chapter)