Rebirth 76: Industrial Internet Empire

After signing the contract, when Yang Mo was about to leave, he asked casually: "Mr. Gorman, I heard that Morgan Stanley's Contract for Difference (CFD) business is very popular on Wall Street!"

Gorman perked up as soon as he heard this, and immediately called a staff member from the investment department...

"Mr. Yang, this is Mike Harvey, who is responsible for the CFD business at Morgan Stanley..."

After Gorman finished speaking, he turned to look at Mike Harvey and said: "Mike, please give Mr. Yang Mo of Zhiyuan Group a detailed introduction to our CFD business..."

Mike Harvey didn't dare to neglect, and quickly introduced it very hard: "Mr. Yang, a contract for difference means that an investor and a dealer sign a contract, and both parties agree to buy or sell a certain financial product at a certain price at a certain point in time in the future. Assets, such as stocks, the three major U.S. stock indexes, major foreign exchange varieties, etc., to obtain the difference in price changes..."

"It's equivalent to a gambling agreement of some kind of financial type?" Yang Mo asked.

"You can say the same thing! Unlike futures, the advantage of CFDs is that you can short-sell any financial asset without actually holding or delivering it, and it is not subject to the short-selling restrictions of the Federal Securities and Exchange Commission!"

"What about the margin and transaction fees?" Yang Mo continued to ask.

"Both parties to the transaction only need to pay 5-20% of the contract value as a deposit. After the transaction is completed, a fee ranging from 0.5-0.8% of the contract value will be charged to both parties as a handling fee!" Mike Harvey introduced in detail.

Yang Mo chuckled and said: "The handling fee is a bit high!"

McHarvey quickly explained: "Mr. Yang, although this price sounds high, as a trader, Morgan Stanley needs to find buyers for the CFD business for investors, and it must also ensure that both parties have the ability to do so after the transaction expires. Complete the payment!"

"If the price changes too much, will investors also liquidate their positions?" Yang Mo continued to ask.

"In principle, this is the case. If the price changes too much, additional margin calls are required. After the position is liquidated, traders need to bear the risk and continue to complete the CFD!" Mike Harvey continued.

Yang Mo laughed and said: "It's interesting! But the handling fee is a bit high! For example, I want to buy a CFD contract of 10 billion pounds now, and the handling fee alone is 500 million pounds!"

He is really wealthy! As soon as he opened his mouth, it was 10 billion pounds. Mike Harvey couldn't help but take a breath and looked at Gorman with pleading eyes...

Gorman pondered for a while and then said: "Mr. Yang, in order for us to establish a long-term strategic cooperation relationship, Morgan Stanley will give you a special discount..."

Yang Mo thought for a while and then said: "Okay! Amazon's European business may be listed in London, so let's sell 20 billion pounds a year in advance! I should support your CFD business!"

"Mr. Yang, are you really prepared to sell for 20 billion pounds?" McHarvey's eyes were as wide as copper bells!

"Mike! You handle it for Mr. Yang personally, and you can't make any mistakes!" Gorman quickly ordered as if he was afraid that Yang Mo would regret it again.

"Mr. Gorman, how much deposit should be paid?" Yang Mo asked with a smile.

"With the reputation of your Zhiyuan Group, just pay the minimum standard of a deposit of [-] million pounds!" Gorman said.

After a while, McHarvey walked in with a drafted CFD agreement.

"Mr. Yang, yesterday's closing price of the pound to dollar exchange rate was 1:1.613. According to this exchange rate, one year later, you need to sell 20 billion pounds at this exchange rate and get 32.26 billion U.S. dollars. Of course, you do not need to actually take out the money on the delivery day. 20 billion pounds to fulfill the contract and just make up the difference!" McHarvey patiently explained after handing the agreement to Yang Mo.

After reading the contract carefully, Yang Mo asked: "Mr. McHarvey, is this contract to sell pounds sterling completed now? Or does it need to wait for Morgan Stanley to find a trading partner before it is officially completed?"

“CFDs are different from hedging. You need to find a trading partner before the transaction is officially concluded. However, foreign exchange CFDs are different from other financial products. We will find a trading partner for you quickly. Even if we cannot find one, Morgan Stanley will take it. Your contract!" McHarvey said.

Yang Mo chuckled and said: "It's interesting! What if we still want to sell our equity?"

"Mr. Yang, please send us a letter of authorization for the equity you want to sell, the transaction price, and the transaction time, and we will find a suitable buyer for you!" Mike Harvey introduced in detail.

"The same is true for the transactions of the three major indexes?" Yang Mo continued to ask.

Mike Harvey nodded and said: "Yes! All financial varieties can participate in CFD transactions, and physical delivery is not required!"

Yang Mo nodded and said: "Okay! Mr. Mike Harvey, after I go back, I will ask the investment department to send someone to contact you..."

Gorman refused to let go of any opportunity to make money, and said with a smile: "Mr. Yang, if you want to get other shares of ARM, Morgan Stanley is willing to help you..."

"Oh?" Yang Mo asked with interest.

"ARM's other non-tradable shares are in the hands of Apple, STMicroelectronics and several hedge funds. Needless to say, Apple is your wholly-owned holding company. Morgan Stanley can get you other equity interests besides Apple!" Gore Man promised swornly.

"What about the acquisition fee?"

"Acquisition fees are generally between 2-5%. Since you are a major client of Morgan Stanley, we charge the lowest level!" Gorman said.

"Okay! If this acquisition can satisfy us, a lot of this business will be handed over to Morgan Stanley in the future!" Yang Mo nodded and said.

"Mr. Yang, I have another unkind request. In order to facilitate the acquisition, can the agreement between us on the arm equity transfer be kept secret for the time being?" Gorman said.

"Of course! Mr. Gorman, you are really a very interesting partner!" Yang Mo chuckled.

.........

Back home in San Francisco, Yang Mo didn't care about the fatigue of the journey, so he called Lin Xi and Li Heping.

"Yang Mo, you are so anxious to find us, did you find any investment opportunities on Wall Street?" Lin Xihe asked impatiently when they first met.

Yang Mo chuckled and said, "You really got me talking! The New York Stock Exchange and the Chicago Board of Trade have too many regulations on the short-selling mechanism. I came here to discuss it with you two. Can we change the way?"

"Another way to go short?" Lin Xi asked puzzledly.

Yang Mo nodded and said: "Yes, through over-the-counter transactions at brokerages, we can avoid the constraints of the Federal Securities and Exchange Commission..."