Oil futures trading on negative values: conflict on the Moscow Stock Exchange
The Moscow Exchange has introduced a new functionality that makes it possible to trade at negative oil prices. As long as the program is in test mode, it will be possible to perform operations with only two instruments – futures for gas and WTI oil, which are exported by the USA.
The issue of providing an opportunity to trade at negative prices has been considered since April. At that time, the reason was the price of WTI futures. It reached the level of “mirror” value for the production contracts, which were presented at the exchange in New York. It was at that moment that the oil price fell record-breakingly below zero. The Moscow trading floor stopped operations when asked for $8.84 per barrel. After that, the exchange recorded the value of exposure at minus 37.63 dollars per barrel. This caused a real panic in the market and caused many millions of losses from sellers, and many traders bought contracts shortly before the trading was stopped. Now the total loss figure is about one billion rubles. In order to at least cover the losses, the traders sued the Moscow Square to compensate for the damage caused.
The main claim of traders is that the exchange stopped all operations and did not extend the price corridor, although according to the rules, it had the right to choose different mechanisms of action. According to a comment from the Central Bank, the rules of the trading platform do not prohibit trading at negative prices.
Not only the capital exchange, but also organizations in other countries found themselves in a difficult situation in April. For example, in China, traders were also affected, but they were fully compensated by the National Bank of China. The trading floor in India has recalculated the prices for 1 rupee, which is almost equivalent to zero value.
Through the class action, traders demand that the Moscow Exchange also recalculate positions at $8.4 per barrel or in favor of zero marks. Due to the fact that the platform officially stated that at that time there were no instruments for trading at negative prices, the probability of changes in favor of zero values is quite high.
It should be noted that the Moscow Exchange does not take the blame, but believes that the restriction of the price corridor prevented even greater losses of traders. In addition, representatives of the marketplace say that the New York Stock Exchange did not warn about the risk of negative values, so the Moscow experts could not prepare for such a situation in advance and prevent damage.