mcx has settlement guarantee fund, if they admit this was their mistake of manipulating the informations, then those who suffer losses can get their fund from their, as settlement guarantee fund is for such situations.
sgx has only open interest of 3 lots in wti crude future april 2020,
dubai has already made clear to its customer brokers and partner about the negative price in contracts,
so this is not the issue of timing, this is the issue of hiding information by mcx to its customers brokers
Killer movements., with prices moving beyond bottom. A lot of people would have had heart attacks next morning.
Right
Contract notes are generated based on the trade files and the settlement files we receive from the Exchange. On the said day, we received the file with Re.1 as the settlement price and the entry on the ledger was posted considering 1 as the settlement price of the contract.
The next day, we received an ‘Adhoc charges’ file from the Exchange on the basis of which the differential entry was posted and additional MTM debited/credited. In respect of the additional MTM, the following email was sent:
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They can’t prepare contract note now with negative. No accounting software works for negative. If we do high school math, buyer should get money . That’s why they are sending separate note . This is unimaginable…
We are group of > 50 people planning to filing suit against MCX/Broker for demanding 2.88 + 0.95 = 3.85 lacs/lot . Many people have lots more than > 10. Please join our whatsapp group 99935-12012
My humble request to all here… Please don’t trade to risk your life and your hard earned money will be looted…
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Ok fine…give me settlement number because u deducted sebi charges…against which it is deducted? Or it deeucted arbitratory?
At any given time a privileged information plays in the markets which retailers are unaware.
The inherent question : Why Crude options not getting expired on same day of Crude Futures expiry?
If options expiry would have been on the same date of Futures expiry then most buyers of the Futures contract would have hedged their positions with buying Put options to protect the risk associated therewith.
Is it a matter of negligence from the Brokers/Exchanges/Regulators
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@nithin you explained most of things but what were the technicalities which caused crude to go negative. Suppose I am a hedge fund with 10 million usd exposure on crude(long) at price of 15usd. Can’t I just decline to take delivery of above commodity and let the counter party keep whole 15usd. Why would I cover my long positions below zero instead of letting go my whole purchase value. What does exchange or SEC (US)regulations say in that regard.
This is specific to that particular expiry, as you are saying hedge fund with big exposure on MCX that fund will be more careful either by closing position on time, or rolling over. Anyhow broker is liable in this case, MCX will deduct money from broker, if broker don’t have own money then other client funds with that broker will be used, it doesn’t matter if fund want to take position or not. If broker money is exhausted including it’s clients money then mcx clearing corporation has to settle it from it’s own, mcx may use investor protection fund.
Later hedge fund has to cover full debit balance, that is on broker to recover it, they may go legal route but that is secondary.
Ahh my query is nowhere related with mcx or in fact India . That is all about US spot and futures and OTC market and their regulations which we are not aware of.
If price is going south and if enough margin is not available then position will be closed by their risk management systems, rules are similar everywhere, broker is liable.
Margin should be equal to contract value .
Retailers have no right to trade-in crude mega lot.
They r sprleculation only
Whole market is speculation only.it is individual interests to trade in instruments which they are comfortable, only problem is not being conscious and over confidence to take trades without any proper experience or advice. Trading on technicals and giving reasons like rsi below 20 macd crossover etc etc. Fundamental oil market dynamics move the price both spot and future.such incidents reminds us again and again the risks associated.
The incident that happened on march also was fatal for many a 1000pt negative open on monday they lost around 80-90k per lot there were many with more than 20 lots at that time ,only people who lost know that.
Crude oil speculation Without knowledge is just economical sucide .
MCX work only for big player got that they stop miNi lot of crude and put retail speculator in huge risk .
Although hedging not works properly in commodity section
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I completely agree with that,mcx can impose new rules and regulation and they can say any reasons,earlier it was said to safeguard small retailer but it ended up in huge impact.traders need to make neccessary changes and stay profitable.because we have power only to control our actions.
This is wierd. Any reason why options won’t expire on the same day as futures?
For may contract Options expire on 14th, future expires on 18th
Hi Nithin,
Thanks for reassuring the investors. But even in the worst case that losses are very high due to such events, in this case both broking and commodities are different legal entities and for all practical purposes have no relationship except for holding company if any. How would this affect Zerodha broking investors?