Grigorii Isaev: On the situation with negative oil price

Who won?

I keep separate apparently from affected citizens to write anything about the situation with oil. The main thesis is that — "force majeure" no one could expect, etc.

I sympathize with the victims and believe that the situation is indeed anomalous. But I think well all understand that none of the players who were on the other side here in Russia — did not receive any profits. Some profit that is not received. They had a hedge, which they sold at the same price -37.63. All of this information is disclosed to the Central Bank, the regulator of course this situation investigated. Ie calls on the subject to cancel the transaction, calculate to a different price without symmetrical action by the CME — as has already been explained to you many times pick up and take away money from people who do these market risks did not sign up and give back to those who took them and lost.

Now about that "no one could have expected".

Facebook does not normally fumble the posts that are reposts of old, but anyone can see my timeline — there was written that day at 8 am, soon expiration, when the physical market stress may be the strongest movement. Where are these movements that day if they are — is not difficult to imagine, when thinking about these risks.

The clients decided on the gas station to play with matches (here we can say that always Smoking at the gas tank rolled who was waiting, etc.), and when it exploded — to blame every reason exchange and even the Committee on the urgent market now.

The fact that CME are in theory possible negative prices — also at that time was already known for some time, of course informing from the CME was weak, they even on your site left lower limit of the price under these contracts is just 1 cent, though in fact he was minus infinity. About it wrote mass-media, in particular on the Bloomberg open access was an article that CME has introduced negative rates. But loudly about this CME said in the midst of the panic than its greatly increased…this CME other venues who are focused of course framed — it is not possible after this sudden announcement to rewrite the whole software, alter the system of risk management and so on under negative prices. Even if you know in three weeks.

We can say that it would be possible in theory, knowing about that expiration ahead of time to spend, but in hindsight we are all strong, none of the brokers has not made such a proposal nor the stock exchange nor on the Committee.

In the market there are people who are supposed to monitor compliance with customer safety, inform them etc. the client End of the exchange — it is not a natural person, and the broker. This broker also needs to think about these risks, know the regulations, etc. All existing rules and regulations were adopted with the approval of the working groups, which included representatives of all major brokers.

The rules that Vecherka no straps — also was introduced not from the Bay floundering, and at the request of brokers. The concern there was that if there is a cleat on Vecherka the broker may be required to transfer additional funds to the exchange, and in the evening it is hard to do, and minus the broker to the exchange will prevent the clients to trade. I.e. this is again a business decision, which allowed brokers to the evening less remains on the exchange to preserve and make them more predictable. This is not the exchange itself had to do so.

This solution now backfired, and customer and broker individual safely shift 100% of responsibility for him in exchange.

Well something like that. NOVOR sent a letter to the leadership of the exchange with a request to participate in restrukturizacii these losses, I don't know how this situation will end, we'll see.

Talk that it appears the Committee had to make the decision to reallocate money from some other participants and to drive the first huge losses — I do not think wealthy. All decisions of the Committee were absolutely justified and accepted by an overwhelming majority of participants.

And most importantly that this again would ultimately shifting 100% loss on the exchange, because to challenge such a decision are not eligible in court would not be difficult, the victims of such actions could Exchange to carry not only in Russian courts, etc. For example, look at India — there is first first made calculation of an intermediate at zero, after porabari all the legal effects, the calculation was made according to the specifications of the contract.

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