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Moscow Exchange has expanded its functionality for trading with negative prices

Moscow Exchange has expanded its functionality for trading with negative prices

The Moscow Exchange will start supporting negative prices on the derivatives market from July 6. The tool will initially work for natural gas and WTI crude oil futures, but the list may be expanded in the future.

The pilot trading mode with negative indicators started on May 26. Expanding the functionality of clearing systems became especially important after April 20, when the value of futures for WTI crude oil for delivery in May collapsed to negative indicators on the New York Stock Exchange. At the end of the trading session, one share cost -$37.63 per barrel.

The Moscow Exchange, meanwhile, stopped accepting applications after the oil price reached the lower mark at $8.84 per barrel. The next day, the Moscow Exchange suspended May futures trading, explaining its decision by the fact that its clearing systems cannot work with negative indicators. In addition, the very fact of what happened could damage the market. As a result, representatives of the exchange announced that the supplies will be carried out at a cost of -$37.63 per barrel — at this rate the trading on the New York Stock Exchange was closed.

Market participants were outraged by what happened, as some of them suffered multimillion-dollar losses as a result of the exchange actions. They turned to the Central Bank, as a regulator, with a request to investigate the case, but it didn’t find any violations. Therefore, on June 5, investors filed a class action lawsuit against the Moscow Exchange as a defendant, demanding compensation for 40 million rubles losses. On June 8, it became known about the second class action lawsuit from other market participants for 45 million rubles. In addition to these, several more claims have been filed.


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