Losses from trading of crude oil futures on the Multi Commodity Exchange (MCX) is likely to keep a large number of retail and high net-worth individual (HNIs) out of the markets for a long time, brokers told BusinessLine . This is even after MCX proposing that it would not allow any negative pricing and keep the base price for single lot of crude oil at ₹1.

“The loss to retail investors in the crude oil markets has been so huge that many would and should not look at the market during uncertainty. The memory of this pain will remain for a long time. In fact, the regulator and exchange themselves should discourage retail traders from crude oil trading or risk getting bad name,” said Sudip Bandyopadhyay, chairman and promoter, Inditrade Capital.

On April 20 when the crude oil priced crashed to negative $37 on the Nymex, the US exchanges, traders in India suffered a loss of nearly ₹442 crore in a single day. Experts say the loss suffered by crude oil traders runs into thousands of crore as the price oil prices have crashed by 80 per cent globally from top. Crude oil contracts have market share of over 50 per cent on MCX.

“We had written to SEBI and MCX about bringing clarity on pricing for trading crude oil contracts. Negative pricing of crude oil should not exist in India and traders should know the limit of their loss. Negative pricing means unlimited loss and nobody is willing to take that. We have also asked MCX to let go of penalty on pending dues till there is clarity,” said CPAI national president Narinder Wadhwa.

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