Brokers’ margins with the exchange, according to sources, was used to complete pay-in and pay-out. Motilal Oswal executive said the brokerage, by challenging the MCX decision, was trying to help the interests of investors who had paid the full value of the contract. It is yet to pay 300 per cent more because of negative closing in the international markets
which is delivery settled; in India, it is cash settled and hence, should be settled at a rate not below Rs 1.
“There is no system of trading any commodity in the negative in India. We are not asking for any payment from the exchange or any relaxation from the regulator. Neither the exchange nor the regulator has given us a hearing. Hence, we moved court since we sniffed a conspiracy,” he added.
Trade sources estimate around 135 brokers are involved in crude oil contracts, of which 13 made profits. Around 80 per cent of the entire profit generated from this crude oil fiasco was made by just two brokers. While brokers on average lost 10 per cent, smaller ones have lost more than 50 per cent of
The total loss is estimated at Rs 450 crore. A large part of the loss was on account of retail investors. The entire fiasco erupted after the West Texas Intermediate (WTI) futures declined to trade in the negative at minus $37 a barrel in New York at around 11.30 pm Indian standard time on Monday.
“Nobody is at fault. MCX followed the laws, and clients traded legally. But, brokers who facilitated the trade between the exchange and clients have incurred losses. We cannot go to our clients seeking 300 per cent additional money; they will not pay once they have already paid 100 per cent. So, Sebi or MCX must settle the April crude oil contract at Rs 1, below which trade is not allowed,” said another broker.