Tech-driven high frequency trading (HFT) firms earned lion’s share of profit from their crude oil bets on the Multi Commodity Exchange (MCX) on April 20, when oil prices turned negative.
More than 11,500 crude oil contracts were outstanding on April 20 when trading closed on MCX. The move by the exchange to set negative price of crude oil for these open positions led to a profit of ₹442 crore to those who held short positions, and loss to those who could not square up their longs. On that day, oil prices fell continuously till the close of trading hours. HFT firms are just directional traders, and hence most were on the right side of the trade that day, brokers said.
