More trouble for NSEL: Brokers threaten legal action if dues not paid

Mumbai: In a fresh twist to NSEL imbroglio, an investor forum today demanded change in the ownership of the bourse and said that the government should takeover all collaterals to restore investor confidence.

The forum also said it will take legal action against crisis-hit National Spot Exchange Ltd (NSEL) if a firm commitment is not given on fulfilling payment obligations, adequately supported by collaterals, by tomorrow.

Responding to the development, NSEL MD and CEO Anjani Sinha said the platform has been used by industry participants satisfactorily for three years, and now holding the promoter exclusively responsible is inappropriate

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AnandRathi Chairman Anand Rathi, who is part of NSEL Investor Forum, told reporters here: “We want firm assurance from the Government or the regulator (FMC) along with NSEL to pay five percent weekly instalment of Rs 5,500 crore. If this commitment is given by tomorrow, we will accept, otherwise we will go to the court.”

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NSEL had halted trading in spot commodities last monthfollowing government orders, leading to a payment crisis.Commodity Participants Association of India along withAssociation of National Exchanges Members of India and BSEBrokers Forum have formed a joint forum to press their demandsrelated to payments.

They have sought immediate intervention of the governmentto restore confidence and protect the interest of investors.

Rathi said: “The only way out to do this is to change theownership (of NSEL). The government should take over all the

collaterals of NSEL or defaulting members, processors andbuyers and to make NSEL, Financial Technologies (its promoter)pay like it did during the Satyam scam. A committee ofprominent people should be formed to sort out the issue torestore investor confidence.”

There is an urgent need to put custody and control ofassets and bank accounts of all the NSEL Group entities and

their promoters under the supervision of government or FMC-appointed committee, he added.

In response to protests by member of the broking fraternity,Sinha said: “We would like to clarifythat 23 buyers are required to meet their pay-in obligationsand any default would be dealt as per legal defaultproceedings. The management of NSEL under the supervision ofthe Board is making all attempts to ensure settlement isachieved.”

NSEL had suspended trading and merged the settlementcycles of all one-day forward contracts on July 31. This

action was taken due to certain abrupt structural changes inthe market place leading to disruption.

Last week, representatives from the Commodity Participants Association of India, the Association of National Exchanges Members of India and the BSE Brokers Forum l met Pankaj Agarwala, secretary, department of consumer affairs and apprised him about recent developments and market sentiments.

The representatives informed the government that investors as well as market participants are eagerly awaiting the revised settlement and schedule, the release said. The associations have suggested to FMC and the Government that all buyers / processors / millers (who are supposed to make payments) should be asked to give their firm commitment towards fulfilment of their obligations, adequately supported by collaterals.

With inputs from PTI