GAIN Capital Escapes Lawsuit Concerning Negative Crude Oil Prices

 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.”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.” 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.