Commodity futures market's dream run came to a halt in 2013 as a Rs 5,600 crore scam in Jignesh Shah-led spot exchange NSEL and imposition of transaction tax on non-farm items hampered the growth of business, with turnover estimated to dip by 30 per cent to Rs 125 lakh crore.
The year began with Finance Minister P. Chidambaram imposing 0.01 per cent commodity transaction tax (CTT) in Budget on non-agri products and processed food items, a development that did not go well with the industry.
The tax that came into force from July 1, affected the trading volume in 21 commodity futures exchanges including the two largest bourses MCX and NCDEX.
July was also eventful as a big scam at the unregulated National Spot Exchange Ltd (NSEL) came in the public glare during this month tarnishing the image of decade-old futures market.
The Centre, which had issued a show-cause notice to the NSEL last year for running a forward contracts in violation of law, finally suspended trading at the spot exchange that unearthed a fraud of mammoth nearly Rs 5,600 crore -- even bigger than Harshad Mehta security market scam.
As many as 24 NSEL members (buyers) owe this amount to 13,000 investors with no stock in warehouses as collateral. So far, about Rs 265 crore has been paid to investors with NSEL defaulting for the 18th time in a row in its weekly payment.
Series of events that unfolded after the ban shook the investors confidence in the commodity markets as multi- agencies probe found out irregularities at NSEL leading to arrest of top officials including its MD and CEO Anjani Sinha.
Nature and magnitude of scam was such that the Consumer Affairs Ministry did not have wherewithal to probe this matter and regulator Forward Market Commission (FMC) was transfered to the finance ministry for overseeing the enquiry.
Jignesh Shah, who was on a high at the start of this year with government's permission to start stock exchange, could not escape responsibility for this huge payment crisis and had to resign from two exchanges -- MCX and MCX-SX -- that he founded and nurtured.
He has virtually lost control over both these bourses with regulators FMC and SEBI appointing their nominees on board.
At the fag end of the year, Shah received another jolt when FMC declared him and his firm FTIL unfit to run any exchange in the country.