The document discusses the NSEL scam, which was estimated to be a Rs. 5600 crore fraud involving the National Spot Exchange in India. The scam came to light in July 2013 when NSEL failed to pay investors in commodity pair contracts. It discusses key individuals like Jignesh Shah who was involved in NSEL. It also outlines the roles of brokers, actions taken by authorities, and effects of the fraud.
1. Presented By
ROHAN KEDIA PGDMBM5CM2135
SHIVAM KUMAR SONI PGDMBM5CM2142
YASH TIWARI PGDMIMCM2159
SHIVANG KHARBANDA PGDMBDI2162
2. CONTENTS
WHAT IS SPOT EXCHANGE
INTRODUCTION OF NSEL
E-SERIES PRODUCT
WHO WAS JIGNESH SHAH
WHAT REALLY NSEL DID
THE ROLE OF BROKER
ACTIONS TAKEN BY GOI
EFFECTS OF NSEL FRAUD
THE END OF NSEL SCAM
CONCLUSION
THANK YOU
3. WHAT IS SPOT EXCHANGE
National Spot Exchange Ltd is trading or a buying and selling a
commodity, paying cash for and receiving your goods on the 'spot'. Which
signifies that the buyer and seller agree on a price and 'deliver' their side
of the contract immediately.
4. INTRODUCTION
National Spot Exchange (NSEL) is a Commodities exchange in India,
and is a joint venture of Financial Technologies India Ltd. (FTIL) and
National Agricultural Cooperative Marketing Federation of India
(NAFED).
National Spot Exchange commenced its live trading operations in
different commodities on 15th October 2008.
Jignesh Shah is the Vice Chairman of NSEL.
The NSEL scam is estimated to be a Rs. 5600 crore
5. E-SERIES PRODUCT
For the first time in India, National Spot Exchange has introduced
MCX (Multi Commodities Exchange) Retail investors can now trade
and invest in commodities like they invest in equities.
The E-Series commodities include: Steel, Sugar, Gold, Silver,
Crude-Oil ETC
6. WHO WAS JIGNESH SHAH
Jignesh shah is the founder and former CEO of the Multi Commodity
Exchange of India LTD. And co founder, chairman and managing director of
Financial Technology India LTD.
7. WHAT REALLY NSEL DID
The NSEL scam is estimated to be a Rs. 5600 crore (around $ 0.9
billion) fraud that came out to light after the National Spot Exchange
failed to pay its investors in commodity pair. contracts after 31st July
2013.
8. DAY 1
Sugar Price = 🔺 increased by 10%
DAY 2
Sugar Price = 🔻 decreased by 20%
DAY 3
Sugar Price = 🔺 increased by 1%
DAY 4
Sugar Price = 🔺 increased by 5%
9. THE ROLE OF BROKER
The Economic Offence Wing (EOW) of Mumbai police found evidence
of some irregularities on the part of the broker in NSEL scam.
The report mentions evidence of illegal of unauthorized changes at the
back end of NSEL, where broker didn't have any control.
The EOW wing of Mumbai police arrested the top 3 brokers namely Amit
Rathi, Chintan Modi, CP Krishnan on 3rd march 2015
10. ACTION
Amit Mukherjee the Assistant Vice-President(business
development) of NSEL was arrested by Mumbai police marketing
the first arrest in the scam on 10th OCT 2013
Jignesh Shah along with trusted assistant Shreekant Javalgekar who
were believed to be mastermind were arrested on 7th May 2014.
11. EFFECTS OF NSEL FRAUD
As an effect on the NSEL fraud the share price of its promoter company
FTIL crashed by 60 - 70% result in massive erosion in the company
market capital.
The share prices of the company MCX(multi commodity exchange Ltd)
also decline.
Jignesh Shah on 9th October 2013, had to resign from the board of MCX-
SX stock Exchange.
12. THE END OF NSEL SCAM
First, on 16th July the contracts were cut to T+10. But that
would involve too many pair trades - from one a month to three
a month, each of which had higher transaction costs.
On July 31st, NSEL issued a circular saying all future contracts
would be stopped but it didn't get paid from the borrowers, it
didn't have the capacity to pay.
13. CONCLUSION
The NSEL crisis is that if someone promises easy money, there
must be something wrong somewhere.
Investors must seek complete clarity when any product promises
to give high returns for very long periods.
There is nothing called a risk-free return if someone claims that he
is giving more than bank fixed deposits.