InvestorQ : Why is BSE offering negative pricing on commodities and what will be the impact?
Ria Jain made post

Why is BSE offering negative pricing on commodities and what will be the impact?

Answer
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Anu Biswas answered.
5 months ago


On 28 April, the Bombay Stock Exchange (BSE) becomes the first commodity exchange to offer negative pricing for commodity F&O. This will not apply to equity and index F&O. This had come up last week after MCX fixed the settlement price of Crude for May expiry at negative level of Rs.(-2844). This increased the losses 4 times for long traders. Now, MCX has announced that lowest price of 1 lot (100 barrels) would be Rs.1. To offer a mid-way solution to traders, BSE has made negative pricing available on BOLT and that could be a setback for MCX. Crude oil on the BSE is benchmarked to the ICE Futures while the MCX crude futures are benchmarked to the WTI NYMEX. With this shift, BOLT can even execute orders at negative prices. It would be interesting to see how it works in practice.