While the Forward Markets Commission (FMC) has done well to tell the National Spot Exchange Limited (NSEL) that it needs to come out with all the facts regarding its payment obligations and stock positions as well as in forcing out the management team headed by Anjani Sinha, FMC needs to be more proactive in finding a quick resolution to the R5,600 crore payments crisis on NSEL that has been dragging for over two weeks. Given that there have been doubts expressed by brokers on the value of the stocks held by NSEL, ascertaining this should have been FMC’s first priority.
More important, since NSEL’s management has all along maintained that the value of the stocks it has exceeds the value of the payment obligations, it is not clear why FMC has not forced the commodity exchange to shorten the payment period—under the settlement schedule given by the exchange, payments are to be made every week stretching all the way to March 7, 2014. An interest amount is also to be added to the payments. Under the circumstances, FMC’s task would have been to issue orders to NSEL on a settlement period—to try and keep this as close to the original settlement dates prior to the crisis developing—and to ensure the stocks were liquidated to achieve this. Allowing a payments default on the very first day of the settlement calendar sets a bad precedent.