InvestorQ : Are some of the brokers justified in dragging MCX to court over the decision to fix prices in the negative territory for crude oil?
Deepa Salunkhe made post

Are some of the brokers justified in dragging MCX to court over the decision to fix prices in the negative territory for crude oil?

Answer
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Juvina Maggie answered.
5 months ago


Some of the brokers like MOSL, Religare and PCS have taken MCX to court over negative price fixation for crude oil. Long traders are upset about a number of factors. MCX system has no facility to factor in negative settlement price. It may be recollected that MCX had changed the trade closure time from 11.30 pm to 5.30 pm due to COVID-19. As a result, long traders in India did not get an opportunity to square off their long trades, which they should have been able to do had the normal timings continued. However, MCX has already completed the entire payout for that particular settlement despite brokers requesting the exchange to hold the payout. Now the onus is on the long traders to take the legal route. In reality, the long traders and brokers may not have a case on hand. Any person entering into a contract must be fully conscious of the fine print of any contract. That applies to crude oil futures contracts too. Buyers are conversant with the risks. If crude is benchmarked to WTI, then it has to accept the settlement price, whatever it is. Any other price would be unfair to the traders who where short on crude.