New Delhi/Mumbai: Crude oil futures contract price may have plunged into negative territory in the international market, but India's leading commodity exchange MCX has fixed an interim settlement price of Re 1 per barrel a move some traders said would help big brokers avert losses amounting to hundreds of crores of rupees at the cost of others having taken a short position.
Officials said capital market regulator SEBI is aware of the situation and is actively looking into the issue, while the matter has reached the government authorities as well, and they want an immediate action if the exchange has acted against regulations or was trying to benefit any particular trader at the cost of others.
Last night, the NYMEX WTI Crude futures May 2020 contract settled at an unprecedented USD (-)37.63 a barrel, after slipping into the negative zone on fears of fast-filling storage facilities globally and an unprecedented plunge in demand due to the novel coronavirus pandemic.
Multi-Commodity Exchange (MCX) of India, which uses the NYMEX price for determining its own settlement price and the available RBI's reference rate for USD-INR for conversion, however, said in a circular that due to the unprecedented price fluctuation in the international markets in crude oil, the due date rate for Crude Oil futures contract expiring on April 20, 2020, is under finalisation.
"In the interim, the provisional settlement price for April 20, 2020, is considered as Re 1 per barrel for the computation of members' obligation for trade date April 20, 2020. Differential settlement, if any, on fixation of the final settlement price shall be done subsequently," it told its members.
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Traders said MCX crude has open positions of 11,522 contracts, meaning 11,522 open positions on expiry were outstanding. Also, since the number of futures buy positions should equal the number of futures sell positions, there would be 11,522 sell or short positions at the time of expiry of the contract.