Forward Markets Commission has been given more powers to handle the NSEL settlement issue worth Rs5,600 crore
The union government on Wednesday said that it has issued a notification giving more power to commodities market regulator Forward Markets Commission (FMC) to ensure that National Spot Exchange Ltd (NSEL) settles its Rs5,600-crore dues to investors.
Financial Technologies India Ltd-promoted NSEL is facing an issue of settlement after it suspended trade in one-day forward contracts on 31st July following the government direction. On Tuesday, it also stopped trading in e-series contracts in gold in anticipation of the notification to this effect.
KV Thomas, minister for food and consumer affairs, told reporters, “We have given more powers to FMC to handle the NSEL settlement issue. The situation is under control”.
According to the notification, settlement of all one-day forward contracts at NSEL shall be done under the supervision of FMC and any order or direction issued by the regulator in this regard shall be binding on NSEL.
Under the notification, the government has also barred NSEL from offering any contracts, including e-series for trading at its platform. The e-series products are banned as they are forward contracts. “Right now, we want NSEL to concentrate on settlement. We do not want to complicate the issue,” Consumer Affairs secretary Pankaj Agrawala said.
Asked if small investors would be given priority during settlement, he said that the Ministry is waiting for inputs from the FMC on this issue.
The exchange, which is promoted by Financial Technologies, plans to submit its settlement plan to FMC by 14th August.
At present, FMC does not regulate spot exchanges. Amid NSEL crisis, the government is seriously working on new regulations for spot exchanges.