MOFSL's broking business sees net losses due to negative crude settlement

Brokers have now increased margins for trading in crude oil futures to make sure the client-level risks can be contained | (Photo credit: Kamlesh Pednekar)
Motilal Oswal Financial Services (MOFSL) saw net losses in its broking business in the June quarter owing to negative price settlement of crude oil derivative positions for customers. The firm’s investor presentation showed a loss of Rs 66 crore on account of this price movement. Brent crude prices entered the negative territory (below $0 per barrel) in April.

After adjusting this as an exceptional item, the business reported a net loss of Rs 5.3 crore. If not for this price anomaly and related settlements, the business would have seen net profits of Rs 61.3 crore in the quarter. MOFSL has also made provision for Rs 88.96 crore worth of dues from commodity broking clients, following the price move. “While entering the contract for taking exposure on the contract value, the customers were required to pay only the margin as required by the exchange, including mark-to- market losses. In relation to such contracts, the company has net receivables from the clients aggregating Rs 88.96 crore,” it said in its results.

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