The '327 incident' that prompted a 10-year trading ban

In early 1995, Chinese government treasury bonds were paying more than 10 per cent but runaway inflation was peaking at 22 per cent. Then rumours began to circulate that the Ministry of Finance would pay compensation to holders of government debt and suddenly the entire country was speculating on treasury bond futures.

Those who believed the rumours bet the price of bonds would climb, while those who thought the government would not provide anything bet the price would drop.

The situation came to a head on February 23, the last day of trading for the March 27 future contract when trade in government bonds accounted for 80 per cent of all market trading.

Zhongjinkai, a securities broker affiliated with the Ministry of Finance, which had gone very long, was proved right when the ministry issued its policy, but Shanghai Wanguo Securities, which had matched Zhongjinkai in short positions, was unable to pay its bills and was declared bankrupt.

So much money had been gambled that the Shanghai Stock Exchange, where most of the transactions took place, could not meet its commitments and eventually the decision was made to cut trading short by 15 minutes on February 23 to bring a halt to the frantic activity.

The government had to come up with more than one billion yuan to pay off Wanguo's losses. 'A lot of people became multimillionaires from that single transaction,' according to a CSRC official.