May 29, 2021
Online trading major GAIN Capital has managed to escape a lawsuit
brought by a trader over negative oil prices.To get more news about WikiFX, you can visit wikifx.com official website.
Judge Brian R. Martinotti of the New Jersey District Court sided with
the broker, which operates brands such as forex.com, and dismissed the
complaint brought by its client Jun Zhang.
  Lets recall that the plaintiff is a self-directed trader who has been
using the GAIN Trader platform to trade derivatives of commodity futures
since 2017. Zhang alleges this action arose from the negative pricing
of WTI futures.
  On April 3, 2020, the CME Group announced to its CME Globex and Market
Data customers that effective April 5, 2020, futures and options
including crude oil "will be flagged as eligible to trade at negative
prices.†On April 8, 2020, CME Group published an advisory notice which
stated, in relevant part, that if major energy prices continued to fall
towards zero in the following months, CME Clearing had a tested plan to
support the possibility of negative options and enable markets to
continue to function normally. The notice specifically mentioned WTI
Crude Oil futures, RBOB Gasoline futures, and Heating Oil futures for
possible negative pricing.
  On April 15, 2020, CME Group sent a memorandum to all clearing member
firms under the subject "Testing opportunities in CME‘s ’News Release‘
environment for negative prices and strikes for certain NYMEX energy
contracts.†The memorandum stated, "Support for zero or negative futures
and/or strike prices is standard throughout CME systems.†It also
stated, "Effective immediately, firms wishing to test such negative
futures and/or strike prices in their systems may utilize CME’s ‘News
Release’ testing environments.â€On April 20, 2020, the day the WTI May
2020 contracts were set to expire, their prices dropped into the
negatives, reaching -$40.32 per barrel at its lowest point, and closing
at -$37.63 per barrel. However, GAINs US_OIL contract pricing remained
in the positives, with the lowest price shown as $0.01 per barrel and
the closing price at $0.05 per barrel.
  On the same day, approximately twenty-two minutes before the closing
of U.S. crude oil trading, GAIN‘s US_OIL trading halted, "thus
dissociating the derivative from its underlying WTI future contracts.â€
On April 21, 2020, GAIN’s platform showed the settlement pricing of
US_OIL for the May contracts as $0.01.
  On April 23, 2020, Zhang received an email from GAIN announcing that
Zhang‘s US_OIL account had been assessed an "adjustment†of -$143,032.00
due to the negative pricing of WTI’s May 2020 contract and that GAIN
had withdrawn that adjustment amount from the plaintiffs Trust Account.
  After inquiring about the adjustment with GAIN‘s customer service, the
trader was told the adjustment was a decision made by GAIN’s trading
platform management.On July 24, 2020, the plaintiff filed a three-count
putative class action Complaint alleging breach of fiduciary duty (Count
I); negligence (Count II); and consumer fraud (Count III).
  On October 2, 2020, GCH filed two Motions: (1) a Motion to Dismiss
pursuant to the doctrine of forum non conveniens; and (2) a Motion to
Dismiss for failure to state a claim.
  Lets explain that Forum non conveniens requires a decision whether a
case should be adjudicated elsewhere, and is the proper mechanism for
enforcing a forum selection clause. A district court therefore may
dispose of an action by a forum non conveniens dismissal . . . when
considerations of convenience fairness, and judicial economy so warrant.
  GAIN asserts when the plaintiff opened his trading accounts on
forex.com, he assented to the Customer Agreement, which contains a forum
selection clause.
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