MCX provides exit option for any commodity hitting negative rate

Mumbai: Commodity bourse MCX will provide exit options to market participants in crude oil all other commodity derivatives if the contracts hit negative prices, the exchange said in a circular Monday.

The exit will not be on expiry day, when a due date rate is published, but on all other trading days if clients through their brokers or prop traders chose to square off their positions.

The exit will be enabled through an auction that will be held in a 15 minute window after market closing, currently 11:30 pm, from 11:40-11:55 pm.

“On any trading day, if the price of Crude Oil contract freezes at the lowest price (i.e. Re. 1/-) in the Trading system and remains at the same level continuously during last 15 minutes of trading (currently 11.15 pm to 11.30 pm) and the corresponding international reference contract is trading at negative price, then the Exchange will provide an additional facility by conducting a separate Auction session for said future contract to facilitate market participants to close out/ square off their open positons.

“In such case, a separate message will be flashed on Trading Workstation (TWS)/ Member Admin Terminal (MAT) terminals of the Members that “Auction session will be initiated in Crude Oil (expiry) contract from (start time) to (end time).” It may be noted that this facility will not be available on the expiry day of Crude Oil futures contract. Please note that this facility will also be available for all other commodities, subject to fulfilment of conditions mentioned in para above,”’l the circular read.

Members can access Auction application by clicking “Auction” icon available on Integrated Portal (https://memprofile.mcxindia.com) provided to Members. Members are required to submit Login credentials in order to login and participate in the Auction session.