National Spot Exchange (NSEL) was a commodities exchange in India that collapsed in a Rs. 5600 crore (US$0.9 billion) fraud. NSEL failed to repay investors in commodity pair contracts after July 2013. The scam involved illegal activities by brokers and back-end changes at NSEL. Key people involved include Jignesh Shah, founder of MCX and FTIL, who was arrested as the alleged mastermind. The fraud had massive effects, crashing share prices of FTIL and MCX while investigations and arrests continue. Lessons highlight the need for clarity on products promising high returns and understanding that nothing is truly risk-free.

2. NATIONAL SPOT EXCHANGE LTD. SCAM

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 15
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 IS 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 US$ 0.9 billion) fraud that came
out to light after the National Spot
Exchange failed to pay its investors in
commodity pair contracts after 31 July 2013. .

8. DAY 1
• Sugar price = 100 +10%(+10)

9. DAY 2
• Sugar price = 80 -20%(-20rs)

10. DAY 3
• Sugar price = 81 +1%(+1rs)

11. DAY 4
• Sugar price = 85 +5%(+5rs)

12. 1 MONTH LATER

13. 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

14. 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.

15. 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 9 October 2013, had to resign
from the board of MCX-SX stock Exchange.

16. 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 31, NSEL issued a circular saying all
future contracts would be stopped.
• But because it didn’t get paid from the
borrowers, it didn’t have the capacity to pay.

17. CONCLUSION
• The first lesson from 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.

18. THANK YOU