Investors to sue Moscow Exchange over stoppage of WTI oil trading - page 7

[Roman]

A100:

The liquidity to buy at the lowest prices could have created stop bids

There is no conspiracy - there is an efficient market which has eliminated the imbalance, albeit in such an exotic way

A stop bid is a market order!
It cannot create liquidity, a stop order takes away liquidity!
Liquidity is in the limit order book.

The counterparty was just stupidly following the price in the western markets.
And poured liquidity to the buyers as the price on the western markets fell.
But the exchange system was not designed for negative prices, and trading was stopped without an opportunity to close positions!
Why did the exchange did not give an opportunity to close traders' positions on the same counterparty?
Because the counterparty just screwed the traders, taking advantage of the situation.
Don't forget that the contract is a settlement contract.

[A100]

Roman:

The counterparty simply followed the price on Western exchanges.

Because the counterparty just screwed the traders by taking advantage of the situation.

Maybe he followed the price, but not stupidly, but by arbitrage - he bought there and sold here at a slightly higher price - thus creating liquidity and earning a kopeck, but no more than that

[Roman]

A100:

Maybe he followed the price, but not stupidly, but by arbitrage - he bought there and sold a bit more expensive here - thus creating liquidity and earning his kopeck, but no more than that

Yes, but clearing was counted at -$37 with no possibility to close traders' positions.
That's why the penny was in the millions. And the woeful traders are in debt.

[Alexey Navoykov]

Roman:

Why didn't the exchange allow traders' positions to be closed on the same counterparty?
Because the counterparty simply screwed the traders by taking advantage of the situation.

What "same" counterparty? The one their last bid was matched to? And on what grounds? Forced? It is unlikely he will agree to close his short position. Or maybe he does not have a position at all, i.e. he closed it with that deal. In general, it does not make sense. And how he screwed someone is also unclear.

[Mikhail Mishanin]

In a nutshell - the futures were WTI 5.20. and those who stayed in the longs after April 21 were not ready to eat real oil at any price and were even ready to pay for non-delivery, hence the negative price. But that's where the americans are at. I do not know the nature of this futures mirror on MAMBA, it looks like some kind of synthetics that punished. You need to know and understand what you are working with, otherwise it's a rake.

[Vasily Belozerov]

Thank you all, I read with interest! About ten years ago I made a decision: forex or stock market, I chose the former. Well, we have not matured enough to do it now. The third world is the third world.

[Yury Stukalov]

people stop arguing herczyk said back in 2013 that futures can have a negative price

[Реter Konow]

I thought the topic was over, but another paradox arose:

The thing is, the balance of the "hit" buyers that sue the exchange should have started to rise from below zero, because buyers are paid extra if the price is negative. Thus, these guys should not only get their money back, but also be paid extra.))

If the price moves in the negative range, then everything flips - the buyers make money on the fall and the sellers on the rise...))

[Реter Konow]

I did a simplified analysis and modelled in my mind the dynamics of the balance of buyers and sellers' positions going from plus to minus.

And so, the picture without taking into account the circumstances of the trade restriction on the Mosbirch. Just how it was supposed to happen:

1. The losses of buyers who opened positions between +37$ and 0$ grew till zero, and after zero they began to decrease, but the profit, in the opposite direction grew. The lower the price was in the red, the more positive balance of positions was restored, until the buyers went from the red to the plus. And we can say with certainty, that at $37, ALL buyers, who bought up to +37 $, went to zero or profit. I think, most of those, who bought above zero, even "warmed up" their hands under zero. And those, who closed above zero, remained in losses.

2. The situation with the sellers was diametrically opposite. Up to zero the shorts grew in profits, but beyond the zero mark we saw their profits decrease. And it was melting all the way down to the -$37 boundary. Perhaps many shortsists were in the negative after a big plus before zero.

Technically, it was the sellers, not the buyers, who were the losers, because in a negative range the sellers are working at a loss, and the buyers are not paying for the buying, but getting paid for it. Logically, anyway...

Specific reasons why the Moscow Exchange stopped the bids and left the positions open are still not clear to me. Most likely a purely technical problem. Probably, their software is not adapted (unlike Western software) to work in a minus price range. They wouldn't do it on purpose...

That's my current opinion.

[Alexey Navoykov]

Реter Konow:

1. The losses of buyers who opened positions between +37$ and $0 rose until zero, and after zero they began to fall, while the profits, in contrast, rose. The lower the price went down, the more positive balance of positions was restored, until buyers went from negative to positive.

Oooh... how messed up even your maths is.