Easy traders

Chasing the promise of outsized returns, 48-year-old businessman He Xiaolun started trading oil last August on a platform developed by the Shaanxi Non-ferrous Metal Exchange. He and other investors say they were duped by online commodity trading platforms that have cropped up over the last few years in China.

Some have been using internet dating sites to lure customers. The China Securities Regulatory Commission CSRC also warned the "large number of complaints and traders against such exchanges were a threat to "social harmony and stability".

Trading volume grew 35 percent annually from to Investment bank Jefferies estimates there are more than 600,000 active spot commodities traders in China. But while a bout of turbulence in major commodities traders markets last month triggered a swift response from regulators against "speculation", there remains little oversight over small regional easy. Despite issuing its warning last month on the risks investors faced playing such exchanges, the CSRC says it is not its job to regulate them.

Disgruntled investors and some analysts say that results in frequent conflicts of interest, as many small exchanges are backed by regional governments. But new speculative hot traders pop up as fast as others are shut down.

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. 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. The site has teams dedicated to blocking offending accounts, but they just reappear later under a new name, he said.

The company cited regulatory changes as one of the key risks to its business in its listing prospectus. Jefferies, which was the bookrunner for the IPO, said in a May 25 report that a "major risk to Yintech is if the Chinese government attempts to unify the regulatory bodies of the various exchanges", but concluded that "we do not believe there is enough political will to do so in the short run". The CSRC said in its warning last easy that some regional exchanges were violating the rules on spot trading.

For example, some were easy intra-day trading with clients, which is only allowed on futures exchanges, CSRC said. The regulator also said some deals easy structured so that exchange members were effectively betting against clients. The exchange itself asked for questions traders be submitted by email, but did not reply to the written questions.

If you have confidence in your ability to make money, you just come and trade. Other investors include PetroChina, Sinochem Corporation, and CNOOC Investment Holding. None of the companies replied to phone calls or faxed requests for comment. In response to the CCTV report, Beijing Petroleum Exchange released a statement on March 25, saying it had launched an investigation into Shihang International, a easy firm that was accused in the report of breaching rules by allowing futures trading.

Hou Xiaoyu, a lawyer representing investors suing the exchange, said that, while it was only licensed for spot trading - which typically refers to contracts for immediate settlement - it allowed what he called quasi-futures trading.

Contracts traded on the Beijing Exchange are standardized, offer high leverage, change hands frequently and are not for the purpose of actually taking delivery of the products - characteristics of easy rather than spot trading, Hou easy.

Beijing Petroleum Exchange said in an emailed statement to Reuters that there had been problems with some traders its member institutions, which it did not name. The exchange added that it has dealt with issues Follow Traders International on Twitter and Facebook mps.

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Video Asia Video Europe Video CEO Interviews Analyst Interviews Full Episodes Shows CNBC U. Thursday, 2 Jun AM ET But while a bout of turbulence in major commodities futures markets last month triggered a swift response from regulators against "speculation", there remains little oversight over traders regional exchanges Despite issuing its warning last month on traders risks investors faced playing such exchanges, the CSRC says it is not its job to regulate them.

Monday, 6 Jun AM ET 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 easy trading commodities by someone easy meet on the site, thinking they are developing a personal relationship.

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