Much to the disappointment of a few investors and brokers, the FMC directed NSEL to upload the settlement calendar on its website.
MUMBAI: The issue of the payment crisis on National Spot Exchange (NSEL) is expected to be taken up in Parliament next week.
Asked to comment on the future course of action after commodity futures market regulator Forward Markets Commission (FMC) invited public opinion on the exchange's payment schedule before taking a decision to approve the plan, consumer affairs minister KV Thomas said, "The NSEL issue will be taken up in Parliament on Tuesday. Considering this, I cannot spell out any details until I speak with the concerned ministries."
Much to the disappointment of a few investors and brokers, who expected FMC to approve the payment of Rs 5,500 crore by NSEL on Wednesday, the FMC directed NSEL to upload the settlement calendar on its website.
FMC chairman Ramesh Abhishek said the regulator had neither approved nor disapproved of the plan.
Along with Financial Technologies -NSEL's promoter -Anjani Sinha, the bourse's managing director & CEO, and brokers, the government has also been blamed for precipitating the crisis as it failed to act in time despite an FMC report in April last year which had cautioned it that NSEL was violating spot market rules by permitting short sales and running contracts in excess of the 11-day tenure of spot contracts.
Thomas declined to respond on the delayed action by his ministry but other market experts were not so remitting.
"It is the job of the government to ensure that every public activity having the potential to cause loss to public or society is regulated and regulated adequately," said MS Sahoo, former Sebi whole-time member and secretary, Institute of Company Secretaries of India. "There was some deficiency as regards contracts on NSEL is concerned. This episode brings also into focus the deficiency in regulation of warehouses."
FMC, too, came in for criticism on Wednesday from certain market and investor circles for not confirming the settlement schedule. But, BC Khatua, its former chairman, said the regulator should not be blamed as it enjoyed no constitutional right to regulate the spot exchanges.
Sahoo agreed and praised FMC for managing the situation, saying it was unfortunate the commodity regulator was inadequately empowered unlike Sebi.
"FMC has very limited responsibility. It is limited to keeping forward markets under observation. Its arsenal is also limited. It needs the assistance of central government or a magistrate to take any effective action, that too, after it concludes that NSEL was operating in the space of forward market in violation of the extant regulatory framework. Under the constraints, FMC is doing an outstanding job. It is unfortunate that the government has not suitably empowered it," Sahoo said.
The government's diktat last month forced the NSEL to suspend trading of contracts on July 31, causing a payment crisis. Based on discussions with 23 borrowers, NSEL submitted a calendar of payment to 13,000 investors over eight months to March 2014.
Asked to comment on the future course of action after commodity futures market regulator Forward Markets Commission (FMC) invited public opinion on the exchange's payment schedule before taking a decision to approve the plan, consumer affairs minister KV Thomas said, "The NSEL issue will be taken up in Parliament on Tuesday. Considering this, I cannot spell out any details until I speak with the concerned ministries."
Much to the disappointment of a few investors and brokers, who expected FMC to approve the payment of Rs 5,500 crore by NSEL on Wednesday, the FMC directed NSEL to upload the settlement calendar on its website.
FMC chairman Ramesh Abhishek said the regulator had neither approved nor disapproved of the plan.
Along with Financial Technologies -NSEL's promoter -Anjani Sinha, the bourse's managing director & CEO, and brokers, the government has also been blamed for precipitating the crisis as it failed to act in time despite an FMC report in April last year which had cautioned it that NSEL was violating spot market rules by permitting short sales and running contracts in excess of the 11-day tenure of spot contracts.
Thomas declined to respond on the delayed action by his ministry but other market experts were not so remitting.
"It is the job of the government to ensure that every public activity having the potential to cause loss to public or society is regulated and regulated adequately," said MS Sahoo, former Sebi whole-time member and secretary, Institute of Company Secretaries of India. "There was some deficiency as regards contracts on NSEL is concerned. This episode brings also into focus the deficiency in regulation of warehouses."
FMC, too, came in for criticism on Wednesday from certain market and investor circles for not confirming the settlement schedule. But, BC Khatua, its former chairman, said the regulator should not be blamed as it enjoyed no constitutional right to regulate the spot exchanges.
Sahoo agreed and praised FMC for managing the situation, saying it was unfortunate the commodity regulator was inadequately empowered unlike Sebi.
"FMC has very limited responsibility. It is limited to keeping forward markets under observation. Its arsenal is also limited. It needs the assistance of central government or a magistrate to take any effective action, that too, after it concludes that NSEL was operating in the space of forward market in violation of the extant regulatory framework. Under the constraints, FMC is doing an outstanding job. It is unfortunate that the government has not suitably empowered it," Sahoo said.
The government's diktat last month forced the NSEL to suspend trading of contracts on July 31, causing a payment crisis. Based on discussions with 23 borrowers, NSEL submitted a calendar of payment to 13,000 investors over eight months to March 2014.
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