Three Legal Reﬂections on the 'Crude Oil Treasure' Incident: Starting with the CME Rule Change
in George Xianzhi Yuan ed., The CME Vulnerability: The Impact of Negative Oil Futures Trading, World Scientific, pp. 85-101 (2020).
16 Pages Posted: 10 May 2021 Last revised: 11 May 2021
Date Written: August 10, 2020
The fall of crude oil futures into extreme negative prices has raised concerns globally. On the one hand, although the negative price mechanism facilitates market price discovery to some extent, in the delivery month it can trigger serious consequences such as abnormal market price ﬂuctuations due to insuﬃcient liquidity, which creates extreme market injustice and raises suspicion of manipulation. On the other hand, the reckless change of programs, which allow negative prices, lacks necessary legitimacy at the procedural level. Market participants who have been treated unfairly should actively defend their rights, and United States regulators and the Chicago Mercantile Exchange Group Inc. (CME) should explain to the market with thorough investigations and credible conclusions. The negative oil price incident is a profound warning and lesson for ﬁnancial institutions and regulators in China.
Keywords: CME, crude oil futures, negative price, market manipulation, rule-making procedure, legal responsibility
JEL Classification: G18, K22
Suggested Citation: Suggested Citation