Govt likely to ban trading of e-series contracts on NSEL

The government is expected to ban trading in e-series contracts on the National Spot Exchange Ltd (NSEL), the only contracts being traded on the platform.

On the NSEL platform under e-series contracts, retail investors can buy and sell commodities in demat form. This is a unique market segment, which functions like the cash segment in equities but offers commodities in the demat form in smaller denominations.

On July 31, the NSEL suspended trade in all contracts except 'e-series' following the government's direction not to launch new contracts because of violation of some rules.

NSEL is grappling with the problem of payment settlement of about Rs 5,600 crore after the suspension.

According to sources, the consumer affairs ministry is likely to bar trade in existing 'e-series' contract and fresh forward one day contracts without prior approval of the authorities.

"A notification in this regard is likely to be issued soon," a senior government official told The Indian Express. The clearing and settlement, pay-in and pay-out mechanism on the NSEL is based on T+2 settlement cycle.

Meanwhile, the NSEL earlier in the day, said that it will submit its detailed settlement plan to the Forwards Market Commission on August 14 and the exchange has constituted a four member committee headed by former chief secretary of the government of Maharashtra, Sharad Upasani, to advise and monitor the progress of financial closeout plan.

Clarifying that it will take five months to settle all the open positions amounting to Rs 5,599 crore, Jignesh Shah, chairman and group CEO, Financial Technologies said, "The detailed settlement plan would be submitted to the FMC on August 14."

NSEL CEO Anjani Sinha, who was supposed to address the media jointly with Shah, could not make it as he was reportedly meeting with the FMC brass.

Members of the independent panel include former Company Law Board chairman Sharad Upasani, former Bombay High Court judge RJ Kochar, former Sebi and LIC chief GN Bajpai, and D Sivanandan, former DGP of Maharashtra.

Shah said under the proposed payment schedule, members will repay the dues in phases over the next five months, with delayed payments attracting a 16 per cent interest. The settlement will be fully in cash, and none of the physical stocks will be handed over to investors to whom money is due. (Indian Express)