FTIL faces toughest challenge with Government moves after NSEL crisis.

2. *Introduction
*FMC Role
*Outcomes of investigation
*FTIL-NSEL Merger met with Opposition
*What is ahead?
*Conclusion

3. *The National Spot Exchange Limited (NSEL) crisis broke in
July 2013
*All the trades were halted by Forward Markets Commission
(FMC)
*Exchange members defaulted on payments to the tune of Rs.
5600 crore
*22 defaulters members are held responsible for payment default

4. *Forward Markets Commission (FMC) is a regulatory authority,
overseen by the Ministry of Finance, Govt. of India
*FMC, as regulator of forward markets had no jurisdiction over
a spot exchange & is supposed to be regulated by the Ministry
of Consumer Affairs
*FMC should take more aggressive actions towards defaulters
than just simply going behind NSEL

5. *Upon investigation, it was revealed that the
warehouse receipts on the basis of which the
trades are executed were worthless
*Many of the warehouses did not have the claimed
stocks of commodities
*22 defaulters are accountable for the
circumstances that led to the NSEL crisis and
payment defaults

6. *Under Companies Act, the Centre has proposed the compulsory
merger of NSEL with parent company FTIL
*The decision of merging NSEL & FTIL has met with an
opposition by FTIL’s shareholder
*The Centre now requires additional time to pass final verdict on
the matter

7. *NSEL on its part is cooperating with government,
whereas the defaulter’s refuse to comply and cooperate
*Bombay High Court has appointed a special committee to
oversee the attachment & liquidation of assets of the
defaulters
*Economic Offences Wing of the Mumbai Police under
directions of Bombay HC has attached assets of defaulters
*FTIL & NSEL have put forth a ‘settlement deal’ in front
of investors which is being met with opposition by
brokers

8. *Only time will tell how and when NSEL crisis case will
get resolved
*The government should go behind defaulters rather than
debating on tangential issues
*What’s the way forward for investors? How will they get
refunds of the money lost?

9. Images are for representation purpose only.