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The National Spot Exchange Ltd (NSEL) has stopped trading in e-series contracts. With this, all trading activity on the exchange has been stopped.
E-series contracts are investment products that enable investors buy and sell only metals in demat form. This product is available for gold, silver, copper, lead, nickel and platinum.
“We have not yet received any government order, but as abundant precaution, we will not commence trading in e-series at 10 a.m.,” a notice posted on the exchange Web site read.
NSEL is grappling with the problem of repaying an estimated Rs 5,600 crore to investors following the suspension of trading.
Consumer Affairs Minister K. V. Thomas said: “We have stopped trading in e-series on NSEL… We decided to stop trade as we NSEL to first settle the dues.” A notification will be issued in a day or two, he said.
There are only two active spot exchanges — NSEL and NSPOT — that provide delivery-based commodity trading service. They have got exemption under Section 27 of the Forward Contract Regulation Act to provide one-day forward contract.
After the latest problem, apart from resolving the regulatory issues, the Consumer Affairs Ministry, along with SEBI and the FMC, is looking into the matter.
E-series contracts are akin to the cash segment in the equity market, but offers commodities in the demat form in smaller denominations. This product contributed about 40 per cent of NSEL’s Rs 18,315-crore turnover in June.
The stock of Financial Technologies, NSEL’s holding company, fell almost 20 per cent to close at Rs 159.15 on the BSE on Tuesday. MCX, another arm of Financial Technologies, was down 10 per cent to close at Rs 331.85.
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