oil price crash: Big brokers might knock HC door today to stop crude payout on MCX

NEW DELHI: Certain large brokers could move the Bombay High Court today with an urgent prayer to stop the settlement of the crude oil near month contract on MCX, an official from a broking firm connected with the matter told ET.

One of their prayers will be that MCX trading system, unlike the Nymex one, is not equipped to handle trades quoting below zero. Also, if the Nymex system has this functionality, so should the MCX system since MCX crude contract is a mirror one.

The April 20 contract settled at a negative Rs 2,884 a barrel and the settlement is slated for this morning where the payout will be made to those short the commodity.

Brokers collected 100% margin from clients. On expiry day Monday, after the contract fell from Rs 965 a barrel to zero, brokers had the entire margin of long clients, cumulatively above Rs 100 crore.

However, on Tuesday when the exchange fixed the due date rate at negative Rs 2,884, reflecting the minus $37.63 the Nymex contract closed at on Monday post MCX closing, it meant clients long would have to cough up cumulatively Rs 332 crore more. MCX crude contract mirrors the Nymex one. The contract open interest at expiry was 11,522 lots.

This has brokers with clients on the long side rattled as the exchange clearing corporation has blocked their collateral to make the pay-in by 11 am today. It means the brokers would have to chase their long clients for the extra amount now. They are worried some clients might not pay the extra Rs 2,884.