A communication trail between various financial sector regulators has shown that they were aware of the regulatory gaps at the National Spot Exchange Limited (NSEL) as early as 2011. However, the lack of clarity on whose jurisdiction the case fell, led to no action on the part of any of the regulators.
While the department of consumer affairs argued that the commodity market regulator Forward Markets Commission (FMC) had the powers to breach the gap, it delayed in implementation of its own decision by eight months till February 6, 2012 when it issued the notification.
The sub-committee of the Financial Stability and Development Council (FSDC), the inter-regulatory body chaired by the RBI Governor, had advised that FMC did not have the mandate to control the pace of growth at NSEL and other spot exchanges and that the regulatory framework for NSEL would have to be “addressed urgently”.
- Varun Gandhi Under Attack Over Defence Deals: Here’s How
- This Diwali, Let Blind Students Brighten Up your Homes With Candles & Diyas
- CBI Files Supplementary Chargesheet In Sheena Bora Murder Case
- Soha Ali Khan And Vir Das Starrer 31st October Audience Reaction
- Sahara Chief Subrata Roy’s Parole Extended Till November 28
- Simple Tips To Secure Your Debit Card From Fraudsters
- New Zealand & India Team Being Welcomed In Chandigarh
- Mumbai Call Centre Scam: All You Need To Know
- Jammu Kashmir Chief Minister Mehbooba Mufti Appeals To Police: Here’s What She Said
- Shocker From Ahmedabad: Find Out What Happened
- Bigg Boss 10 Day 3 Review: Celebs Fail To Do Well in First Task
- Airtel Offers 10GB Data At Rs 259 For New 4G Smartphone Users
- Aamir Khan Starrer Dangal’s Trailer Launched: First Impressions
- TMC Supporters Attack BJP Leader Babul Supriyo
- Sri Lankan Navy Apprehends 20 Indian Fishermen
The communication between FSDC, FMC and the consumer affairs ministry between June and August 2011 shows that although the issue did come up, there was no regulatory action.
The opinion of the FSDC was communicated by then economic affairs secretary R Gopalan to Rajiv Agarwal, the secretary for consumer affairs.
“Sebi is not claiming regulatory jurisdiction over spot delivery contracts in commodities. However, it appears that the regulation of spot commodity trades does not even come under the purview of FMC, which covers only forward contracts,” Gopalan wrote.
Agarwal wrote back supported by an observation from the FMC, saying the FSDC view was not correct. “It may be added that ‘Inter-State trade and commerce’ is covered in the entry 42 of the Union List.” He also said that all outstanding positions have to be squared off at the end of the day, his letter dated August 8, 2011 noted.
While the consumer affairs ministry was arguing with FSDC over jurisdiction, the FMC was given the role of only a designated agency to call for information on seven issues including ensuring that the spot exchanges complied with a ban on short selling.
Investments of around 13,000 investors are stuck with NSEL for settlement for almost 10 months now after NSEL suspended trading in all contracts on July 31, 2013.
This followed the consumer affairs ministry of directive not to issue fresh contracts that cross the 11-day timeline. These contracts were in violation of the norms.
FTIL board gets new chairman
MUMBAI: The board of FTIL has elected non-executive director Venkat Chary as the new independent non-executive chairman. “In the interim, the existing two whole-time directors of the company will be in charge of the day to day affairs,” FTIL said.
Meanwhile, shares of FTIL and group entity MCX plunged on the stock exchanges following Shah’s arrest on Wednesday.
After plummeting 9.38 per cent in intra-day trade, shares of MCX finally ended at Rs 496.35 on the BSE down 6.99 per cent from its previous close.
Shares of FTIL were down 5 per cent to Rs 276.70, its lower circuit limit. ENS
Shah, Javalgekar remanded to EOW custody till May 15
MUMBAI: A Maharashtra Protection of Interest of Depositors’ (MPID) Act court Thursday remanded Jignesh Shah, director of NSEL along with Shrikanth Javalgekar, group financial controller to the custody of the EOW of the Mumbai Police crime branch till May 15. The EOW told the court the duo had to be interrogated for their alleged involvement in the Rs 5,600 crore fraud on NSEL.
According to the EOW, both Shah and Javalgekar knowingly exposed the investors to high risk. Their custodial interrogation was required to get to the “crux” of the fraud, prosecutor argued.
Advocate Mahesh Jethmalani, who represented Shah refuted the prosecution’s claims and said Shah can not be booked for breach of trust and forgery as his staff was involved in wrongful activities and he was unaware about the same. Jethmalani argued that Shah had appeared 21 times before the police.
Advocate Aabad Ponda, appearing for Javalgekar, added that his client was in fact named as a witness in the chargesheet filed by the EOW earlier this year. The court accepted the duo’s application for home cooked food and medicines.
In a statement, Shah-promoted FTIL said the company was distressed at its CMD’s arrest despite his full cooperation not only with the Mumbai Police but also with all other authorities.