Following a government direction, National Spot Exchange Ltd (NSEL) today said it has explained to Forward Markets Commission (FMC) the reason behind suspension of trade in all contracts and a meeting has been scheduled with brokers, the regulator and the exchange for a satisfactory solution for settlement of dues.

Amid concerns about potential pay-out defaults by NSEL to brokers and clients after suspension of trade on July 31, the Consumer Affairs Ministry had asked FMC to get details from the exchange on the settlement issue within a day.

“NSEL yesterday submitted required information to the Forward Markets Commission (FMC),” the exchange said in a statement.

Subsequently, a meeting was held today on this issue and it was decided that FMC and the exchange officials would meet 21 entities (bulk buyers also know as planters) and brokers tomorrow to arrive at a satisfactory solution for settlement of dues, NSEL said.

“The meeting will be held tomorrow with an agenda to arrive at a consensus and satisfactory solution for settlement of dues in accordance with exchange rules and bylaws,” the exchange said.

The meeting is also aimed to ensure avoiding any incidence which may have consequential impact on larger market, it added.

NSEL further said that the regulator has asked details of brokers, planters and other participants who are not cooperating with the exchange in resolving the matter related to settlement cycle.

“The FMC along with other government agencies would work together to ensure a safe and secure settlement of dues,” the exchange noted.

The NSEL Board expressed that they would ensure that smooth settlement process takes place as per the exchange norms under the guidance of the FMC, it added.

NSEL —— promoted by Financial Technologies India Ltd (FTIL) and National Agricultural Cooperative Marketing Federation —— had suspended most trades on its platform and deferred settlement of contracts for 15 days.

Besides FMC, Sebi has also started a separate probe amid a crash in the shares of two listed group companies —— FTIL and MCX —— following the NSEL decision.

(This article was published on August 3, 2013)
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