On 20 April 2020, the US WTI crude oil contract crashed to -$37.63 per barrel, something many traders never thought was possible. The sudden move led to heavy losses for several MCX crude oil traders in India.
After more than 6 years, the Bombay High Court has upheld MCX’s settlement process and ruled that experienced traders cannot seek court relief simply because an unexpected market event caused losses.
A few takeaways:
Crude oil traded at negative prices for the first time in history.
MCX settled contracts based on the linked NYMEX prices.
The court said market participants voluntarily take trading risks.
Large losses alone are not a reason to reverse completed settlements.
The market can do things that seem impossible. Risk management matters more than certainty. The day crude went negative is a reminder that in trading, protecting capital is just as important as making profits.
@Adarsh_Patil Is Zerodha RMS prepared to handle negative pricing across all systems? If something similar were to happen today with Crude and MCX is open, Could I sell futures or options at say minus -1000?
I mean if they can input 1 or 2 and that won’t be junk order? Furthermore, Have you stress tested it? Removing it when the market is actually crashing seems like a disaster waiting to happen. As far as the mobile app is concerned, I can’t input - at all. I don’t think it can be removed live. So, you would push a update to the play store and then play store gets your updated app and we get it after sometime? Again this policy seems way too risky for me for very little benefit(junk orders prevention?).
