Delhi HC refuses relief to investor in oil future contracts against MCX, SEBI

New Delhi, April 27: The Delhi High Court on Monday refused to grant interim relief to an investor who filed a petition against Multi Commodity Exchange, its clearing corporation MCXCCL and SEBI over negative pricing of the crude contract but directed the respondents to file their replies in four weeks to the petition. 

One of the investors Akshay Aluminium Alloys LLP had approached the Delhi High Court against MCX and the capital market regulator Securities & Exchange Board of India (Sebi), The Economic Times reported. 

However, the court has now directed the exchange and the SEBI to reply within four weeks and has adjourned the case to June 24. 

Meanwhile, in a related development, a Bombay High Court judge recused himself from hearing a petition filed by Motilal Oswal Financial Services and PCS Securities in the high court against the aforesaid respondents on the same issue. 

The April contract was settled by the MCXCCL at a negative Rs 2884 a barrel, mirroring the negative $37.63 a barrel settlement price on US-based Nymex. 

The petitioners have reportedly cited the inability of MCX’s software to take a zero or negative price quote and the fact that MCX had closed at 5 pm on April 20 at a positive rate while the Nymex front-month crude contract settled later at night at a negative rate. 

Also, the MCX contract is cash-settled while Nymex settled at a negative rate because of delivery based issues. 

The exchange’s clearing corporation blocked the funds for the negative price from the long brokers’ collateral to make them pay -into the brokers representing clients on the short side. 

This resulted in brokers Motilal Oswal Financial Services and PCS Securities filing a writ petition in the Bombay High Court and the investor moving the Delhi HC against the bourse. Market regulator SEBI is a co-respondent. 

Ravichandra Hegde and Malvika Kalra, partners at the law firm Parinam Law Associates are representing the investor in Delhi High Court. 

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