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In a historic decision being taken by MCX considering the global market conditions of crude oil, the futures contracts of Crude Oil which expired yesterday i.e. 20th April, 2020 are to be closed out at a price of Rs. -2884 per barrel (Negative Two Thousand Eight Hundred and Eighty Four).
What would this mean?
Clients who had long positions at expiry shall be debited with the said amount multiplied by the number of lots they had bought.
And
Similarly clients who had short positions at expiry shall be credited with the said amount multiplied by the number of lots they had short-sold.
Here’s an example to help you understand this better:
1 lot of Crude Oil = 100 Barrels
Long Position: 1 lot X 100 X -2884 = -288400 (to be debited)
Short Position: -1 lot X 100 X -2884 = 288400 (to be credited)
For more details, the MCX circular giving the close out price can be viewed here: https://www.mcxindia.com/docs/default-source/circulars/english/2020/april/circular-282-2020.pdf?sfvrsn=b7598990_0
Following the directives of the above circular, the ledger of our clients has been debited/ credited considering their long positions/short positions respectively.
Considering the fact that the entire market is not very pleased with the above decision of MCX and with the possibility that MCX / SEBI may reconsider their decision, the fund amounts of clients who have been credited as per above the circular shall be blocked. Clients won’t be allowed any exposure nor would be able to withdraw such amounts till further notice /clarification.
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