Oil bulls on MCX take Rs 332 cr hit from freaky Monday plunge

Mumbai: Crude oil bulls on stock exchange MCX have been badly singed as they cumulatively have to cough up ₹332.3 crore more after the exchange in a circular on Tuesday fixed the due date rate of the April 20 expiry crude contract at a negative ₹2,884 per barrel.Monday night the hapless bulls had seen their punts evaporate when the Nymex crude contract, that MCX crude mirrors, hit a negative $37.63 a barrel post the domestic bourse closing at 5 pm.Brokers are now on edge as some of them fear that their clients might not pay up or chose the arbitration route instead. “We will now be chasing them for the payin,” said one broking official who asked not to be named.Brokers might seek legal remedy to stop the settlement which will happen at 11 am Wednesday, said a broker seeking confidentiality .MCX’s clearing corporation had fixed the provisional due date rate at ₹1 on Monday post-closing. This came as a relief to crude bulls as their loss would have been contained at ₹1 per barrel against Monday closing at 5 pm of around ₹965. But the exchange’s circular on April 21, fixing the due date rate at rupee equivalent to the Nymex contract’s negative closing, has dashed their hopes. Their loss is the bears’ gain.Stock exchanges like MCX, NSE, BSE, NCDEX and ICEX revised trade timings for internationally referenceable non-agri commodities to 5 pm from 11:30 pm on March 30 amid the national lockdown. This put domestic traders at an inherent disadvantage as trading on such contracts becomes active post 5:30 pm when the US markets open. It exposed them to volatile openings and sharply reduced participation. However, some clients, as in crude, kept decent overnight positions.Sebi has now revised the timings of the commodity derivatives segment back to 11:30 pm from 5 pm with effect from April 23.“The crude oil futures contracts are traded in MCX for the last 15 years and the said contracts are always settled at Due Date Rate as specified in the contract specification i.e., NYMEX WTI Crude oil front month contract’s settlement price converted into Indian rupees,” read the MCX circular citing the negative due date rate.

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