In a bid to ring-fence traders and investors who have Rs 5,599 crore stuck in the National Spot Exchange (NSEL), the Forward Markets Commission (FMC) on Monday barred Multi-Commodity Exchange (MCX), a sister concern, from using its funds to giving loans or advances to any entity without its approval.
The move comes in the context of a possible payments crisis at NSEL, which has unsettled transactions to the tune of Rs 5,599 crore following the suspension of settlements since last Wednesday. The regulator has also directed NSEL to immediately disclose details of stocks in warehouses — valued by NSEL at R6,200 crore — including the quality and quantity of the physical commodity. The exchange has been told to make this information public by Monday night.
The FMC has also asked NSEL to first settle the dues of around 7,000 retail clients owed less than R10 lakh each and to deal with such clients directly and not through brokers.
FMC chairman Ramesh Abhishek told FE that MCX has been directed not to give any loans, advances or make any financial commitment to any corporate or non-corporate entity without FMC’s prior approval, excepting transactions in the normal course of business. “This financial ring-fencing has been done to instil confidence among investors,” Abhishek said.
The FMC chief said it would be receiving all the information. “They have been asked to put up the information regarding all their warehouses, where they are located, address, quantity quality, name of the owner and goods on their website immediately. They have also been told that, as and when money comes in, retail clients should be paid first,” he said.
The regulator has also directed all exchanges under its purview to immediately call their respective board meetings to discuss the fall-out of the NSEL matter and take necessary measures. It has, however, given direct instructions to MCX, which belongs to the same group promoted by Jignesh Shah.
The flagship Financial Technologies (FTIL), the holding company of NSEL, also owns 26% stake in MCX. In 2012-13, MCX clocked in revenues of Rs 499 crore and held cash & equivalents worth Rs 1,274 crore. Neet sales of FTIL, for the period, were Rs 3,283 crore and it possessed cash & equivalents of Rs 2,013 crore.
Interestingly, on a day when Shah announced the formation of a four-member independent “oversight committee” to monitor the financial closure plan being worked out by the exchange, the