Last week the advocates of Zerodha sent out legal notices to clients who bought crude in april 2020 contract and have debit balances seeking the claim with 18% interest.
No doubt its a loss to zerodha but My suggestion would be to the CEO is that they should consider the following as the negative crude price is unheard off and small traders are affected.
zerodha should initiate legal steps with mcx and govt to treat the negative crude price as void. Hope this might be already undergoing . I see in some high courts and supreme courts it is still pending.
Till the negative price issue is solved by courts the recovery process from small traders should be kept on hold.
Even if it is desired to formally initiate legal action. it should be considered by zerodha and other brokerages to share the loss 50% each to solve the issue amicably instead of spending long years in unfruitful litigation.
The small trades with 1 lot or 2 should be considered to give waiver on interest also and it can also be considered to give concession based on the brokerage earned by zerodha from that client so far.
The action if any is to be initiated by your end and not by the Broker. The Broker is merely a platform provider and is/was not a party to the contract.
(i) The courts have ruled that clients in debit make good such debit balance to the broker. Here’s a recent order passed by the Delhi High Court in this matter
(ii) MCX has already recovered the obligation from the Broker. Do you think it’s fair for the Broker to be settling debit obligations created by trades made by its clients?
Can Brokers claim for a percentage of the profits booked by traders? As a market participant, a client who engages in trading in the derivative segment undertakes to partake all risks that come with such participation.
We’ll have someone from our RMS team reach out to discuss. While we can certainly consider to forego a portion of the interest that has been levied (on account of Zerodha earning from such interest), please understand that it’s almost impossible to give any concessions on the debit balance cos as I said earlier, such funds have been recovered and Zerodha has paid for it.
We have always strived to maintain utmost healthy relationship with our clients, and have made several attempts to get our clients to repay these dues. It’s only after not receiving any updates despite constant follow ups, we’ve had to send out these notices. Also, we’re well within our rights to send this notice to recover dues.
You are saying the profit is not being shared with zerodha so you cant share the loss on account of negative crude episode which is unheard of in india. As the zeroda failed in cautioning clients can atleast consider the brokerage collected from that client from account opening till date and also waive all interest and send an offer to client and more than 90% of small clients would settle the matter instead of protracted litigation.
We’ll have someone from our RMS team reach out to discuss. While we can certainly consider to forego a portion of the interest that has been levied (on account of Zerodha earning from such interest), please understand that it’s almost impossible to give any concessions on the debit balance cos as I said earlier, such funds have been recovered and Zerodha has paid for it.
also i read somewhere that mcx has 400 crore settlement fund. the amount to be recovered from clients (long position holders) is about 331 crores, then why mcx shouldn’t pay it from that fund because this event happened when exchange & clients are not well updated.
also eager to know what happened to that case , some brokers went to high court for this matter.
another question is that, has the trading volume (in crude) increased or decreased after that event month on month or yr on yr bases?