InvestorQ : Why have some of the brokers dragged the MCX to court over the crude oil decision? As a short seller in crude, why should I not get my full profits and MCX is correct.
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Why have some of the brokers dragged the MCX to court over the crude oil decision? As a short seller in crude, why should I not get my full profits and MCX is correct.

Answer
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6 months ago


Three major commodity brokers (Religare, Motilal Oswal and PCS) have filed a petition against the MCX for settling the MCX Crude contract on 20th April at a negative price of Rs.(-2884). This had led to the increase in the losses for long position holders in crude oil from Rs.110 crore to Rs.442 crore. The petitioners have argued that the MCX has no provision for negative settlement and hence this settlement prices should be treated as null and void. The petitioners have also pointed out that the problem arose due to change in trade timings post COVID-19, denying position closure opportunity. However, if NYMEX is the benchmark then that is what the exchange will have to adhere to and that is what it has done. These arguments may not really carry much water with the exchange.