The Multi Commodity Exchange Clearing Corporation Limited (MCXCCL) on July 15, 2024, notified regarding the Alternate Risk Management Framework Applicable in case of Near Zero and Negative Prices.
The following has been stated:
• The Commodities/Indices in which the Alternate Risk Management Framework (ARMF) in case of Near Zero and Negative Prices will be applicable:
The below mentioned commodities/Indices are identified as susceptible to the possibility of near zero and negative prices:
o Crude Oil
o Natural Gas
• Conditions in which the ARMF will be triggered:
o There is a fall in the commodity/Index prices by more than 50% within 20 trading days, while comparing the intra-day highest and lowest prices.
o In case of internationally referenced contracts, the international exchange/ clearing corporation having the benchmark contract decides to introduce such measures for negative prices.
o Options contracts having strike price values of near zero/negative are introduced by the stock exchange for trading.
o Any other conditions which might indicate the likelihood of negative prices.
The provisions of this circular shall be applicable for the month August 2024.
[Notification No MCXCCL/RISK/173/2024]
