They are only allowing clients to square off their existing positions. In cases where clients are initiating trades, brokers are seeking 200-400 percent margin.
The CEO of a broking company confirmed this development "Around half a dozen brokers have already started discouraging their clients from initiating any fresh position in crude oil contract from April 21. Other brokers may also join in as the risk management system does not allow such kinds (negative prices) of trade.”
Brokers are upset with the settlement of April crude oil contracts at a negative Rs 2,884 per barrel by MCXCCL. Some brokers, including Motilal Oswal Financial Services, Religare Securities, and PCS Securities, have challenged this settlement process in the Bombay High Court. The court case has adjourned the case for April 29.
Impact of the move on MCX
So, how big would the impact be on MCX? The CEO of a broking quoted above said these brokers constitute more than half the volumes in crude oil contracts on the MCX.
What’s Sebi doing about the issue?
However, MCX may be unable to tweak its software to handle a negative price settlement in less than two months as they need to first receive it from their software vendor — 63 moons technologies and then conduct at least three-to-four mock trading sessions with brokers. This is the usual practice that exchanges follow when they carry out any major changes in their systems.
IMPORTANT LEVELS FOR TODAY
RESISTANCE 1 – 1326
RESISTANCE 2 – 1355
RESISTANCE 3 – 1380
RESISTANCE 4 – 1414
SUPPORT 1 – 1248
SUPPORT 2 – 1213
SUPPORT 3 – 1190
SUPPORT 4 – 1164
ProCapitas Market-Pro Team