CORRECTED-Russian brokerages seek compensation from Moscow bourse over suspended oil futures trading

(Corrects currency in 1st and 3rd paragraph from dollars to roubles)

MOSCOW, April 28 (Reuters) - The brokerage arms of some of Russia’s largest banks are seeking compensation from the Moscow Exchange after market participants lost almost 1 billion roubles ($13.6 million) when trading was halted amid last week’s U.S. oil futures price dive, law firm Milton Legal said.

The Moscow Exchange suspended trading of April futures on Light Sweet Crude Oil blend, which are pegged to U.S. West Texas Intermediate (WTI) crude futures, when WTI slid below zero for the first time ever on April 20.

The decision made by Russia’s largest bourse left many traders unable to close positions, leading to losses close to 1 billion roubles, Milton Legal said.

Many of Russia’s leading brokerages, including the brokerage arms of state-owned and private banks, have now joined individual investors in preparing to file a lawsuit against the exchange.

Brokerage units of Alfa Bank, VTB, and Otkritie, as well as Alor Broker, Finam, BCS Brokerage and Solid Invest, have all joined more than 40 individual investors already preparing to make a claim.

The MOEX said last week that brokerage and clearing systems could not work with negative prices, so it preemptively halted trading to avoid any technical issues.

The bourse also said last week it saw “no grounds for compensation” as this suspension did not affect the execution price of the futures.

On April 20, WTI crude oil futures ended the day at minus $37.63 a barrel as traders paid to get rid of oil amid a coronavirus-induced supply glut and evaporating demand.

In Moscow, the trading was stopped with a minimum price of $8.84, Milton Legal said.

As of April 20, there were around 750 individual investors holding long open positions on contracts for Light Sweet Crude Oil, according to the Moscow Exchange data.

After halting the trading of the oil futures, the MOEX asked Chicago-based CME Group Inc to spell out ways to use negative future prices as settlement prices.

The Moscow Exchange also promised to introduce a mechanism for trading derivative financial instruments with negative prices for the underlying asset in the coming months.

The MOEX trades two oil futures, Light Sweet Crude Oil and Brent. As of April 21, the latter saw an average monthly turnover of 2.6 trillion roubles this year compared with the 2.9 billion roubles for the former.

$1 = 73.6675 roubles Additional reporting by Elena Fabrichnaya and Andrey Ostroukh; Editing by Andrey Ostroukh and Emelia Sithole-Matarise