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NSEL investors threaten legal action
A joint body of investors in the commodities market and brokers on Tuesday warned of legal action against National Spot Exchange (NSEL) and its promoters if the bourse's payment scheduled fails to match their expectations. The forum's representatives said they could also suggest to the government a Satyam-like solution for NSEL under which a board of respected people from various business segments, like HDFC chairman Deepak Parekh, could take over the bourse to oversee the settlement process.
The forum, through a release, also suggested that NSEL, its group firms MCX, promoter company Financial Technologies and the group's promoter Jignesh Shah be held responsible for the current crisis. They suggested attaching Shah's personal properties till the settlement is carried out. "NSEL, MCX and FT have common promoters and directors...There is no transparency and there is a lack of adequate and timely information flow from NSEL and FT. Why should regulator and the government not ring-fence assets of FT and the promoter, Jignesh Shah and family to meet shortfall of the investors funds?" a release from the forum said. The group, christened NSEL Investors Forum, held the media meet in association with Commodity Participants Associations of India ( CPAI), Association of National Exchanges Members of India (ANMI) and BSE Brokers Forum (BBF). Reacting to this suggestion by the forum, NSEL said that 23 buyers were required to meet their pay-in obligations and any default on their part would be dealt as per legal default proceedings of the exchange.
"The management of NSEL under the supervision of the board is making all attempts to ensure that the settlement is achieved. This institution
has been used by industry satisfactorily for three years and now exclusively holding the promoter responsible is inappropriate," said Anjani Sinha, MD & CEO, NSEL.
The NSEL is set to announce a detailed settlement schedule on Wednesday that will give all the relevant information about who are going to pay how much and who all will get how much money. The exchange will also detail how, in case of any delay in payment of funds or delivery of goods, settlements will be done. Nirmal Jain, chairman, IndiaInfoline (IIFL) Group, said that everyone connected with NSEL's payment crisis was waiting for the exchange to come out with its settlement calendar on Wednesday. "After we see the settlement calendar, we would decide on further course of action, including a suggestion to the government if the management of the bourse could be handed over to a government-appointed independent body," Jain said. IIFL group companies are active in the commodities broking business space. "If they fail on Wednesday, we could also move the court or take other legal action," he said. On July 31, NSEL had said that it was suspending all trades on one-day contracts on the bourse from the next day and would also merge several days' settlement into one. Since the announcement led to a payment-default like situation, the government and the Forward Markets Commission (FMC), the regulator for all commodity derivatives trades in India, stepped in to resolve the crisis in which around Rs 5,500 crore worth of funds and commodities are involved.
A joint body of investors in the commodities market and brokers on Tuesday warned of legal action against National Spot Exchange (NSEL) and its promoters if the bourse's payment scheduled fails to match their expectations. The forum's representatives said they could also suggest to the government a Satyam-like solution for NSEL under which a board of respected people from various business segments, like HDFC chairman Deepak Parekh, could take over the bourse to oversee the settlement process.
The forum, through a release, also suggested that NSEL, its group firms MCX, promoter company Financial Technologies and the group's promoter Jignesh Shah be held responsible for the current crisis. They suggested attaching Shah's personal properties till the settlement is carried out. "NSEL, MCX and FT have common promoters and directors...There is no transparency and there is a lack of adequate and timely information flow from NSEL and FT. Why should regulator and the government not ring-fence assets of FT and the promoter, Jignesh Shah and family to meet shortfall of the investors funds?" a release from the forum said. The group, christened NSEL Investors Forum, held the media meet in association with Commodity Participants Associations of India ( CPAI), Association of National Exchanges Members of India (ANMI) and BSE Brokers Forum (BBF). Reacting to this suggestion by the forum, NSEL said that 23 buyers were required to meet their pay-in obligations and any default on their part would be dealt as per legal default proceedings of the exchange.
"The management of NSEL under the supervision of the board is making all attempts to ensure that the settlement is achieved. This institution
has been used by industry satisfactorily for three years and now exclusively holding the promoter responsible is inappropriate," said Anjani Sinha, MD & CEO, NSEL.
The NSEL is set to announce a detailed settlement schedule on Wednesday that will give all the relevant information about who are going to pay how much and who all will get how much money. The exchange will also detail how, in case of any delay in payment of funds or delivery of goods, settlements will be done. Nirmal Jain, chairman, IndiaInfoline (IIFL) Group, said that everyone connected with NSEL's payment crisis was waiting for the exchange to come out with its settlement calendar on Wednesday. "After we see the settlement calendar, we would decide on further course of action, including a suggestion to the government if the management of the bourse could be handed over to a government-appointed independent body," Jain said. IIFL group companies are active in the commodities broking business space. "If they fail on Wednesday, we could also move the court or take other legal action," he said. On July 31, NSEL had said that it was suspending all trades on one-day contracts on the bourse from the next day and would also merge several days' settlement into one. Since the announcement led to a payment-default like situation, the government and the Forward Markets Commission (FMC), the regulator for all commodity derivatives trades in India, stepped in to resolve the crisis in which around Rs 5,500 crore worth of funds and commodities are involved.
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