InvestorQ : What does it mean that MCX has now set the base price for 100 barrels of crude at Rs.1. Does this apply to the April 20 trade also?
Tisha Malhotra made post

What does it mean that MCX has now set the base price for 100 barrels of crude at Rs.1. Does this apply to the April 20 trade also?

Answer
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Moii Chavate answered.
5 months ago


MCX has finally gone ahead and fixed the bottom price for 100 barrels for crude oil (the lot size for trading in MCX futures in crude) will be set at Rs.1 by MCX. MCX accounts for 95% of the crude oil futures volumes in the Indian markets. This will apply to any crude futures contract traded on the MCX platform. One of the major reasons for MCX setting the bottom price at Rs.1 is because the current trading platform does not allow traders to put negative price quotes. On 20 April, MCX was up against a unique problem with benchmark NYMEX closing in the negative zone. This created chaos at MCX as the exchange follows final price of NYMEX to settle contracts in India. Since the NYMEX prices slipped into negative terrain, MCX fixed settlement price of May crude oil contracts at Rs.(-2,884). That led to a loss of Rs.442 crore for long traders spread across 11,500 contracts of crude oil futures. Long traders had argued that MCX cannot set negative price for its oil contracts as its trading platform has not enabled such a provision. Crude attracts the lowest margin of 5%, one reason why it is so popular with retail traders in commodities.