There may be 600,000 active Chinese commodities traders
The whims of Chinese retail investors are now a major force in commodities markets.
Clever marketing and the promise of easy money has lured 600,000 retail traders into the commodities spot trading market, according to Jefferies. Volumes have exploded and there is little oversight over small exchanges, according to a profile from Reuters.
Here is where it gets bizarre:
Many retail investors have ended up on regional spot exchanges as commodity trading firms ratcheted up their sales pitch, with cold calls from sales representatives promising double-digit monthly returns.
Online dating sites, too, have become popular venues for the hard sell by some trading firms.
Users are lured into trading commodities by someone they meet on the site, thinking they are developing a personal relationship. They often end up losing tens of thousands of yuan before realizing the relationship is strictly business.
"This has become the biggest type of scam on our site over the past year," a top executive at a leading Chinese online dating company said.
That's a strange scam but the scandal is how close the ties are to the exchanges and regulators.
