New Delhi : Business came to a halt at crisis-ridden National Spot Exchange Ltd (NSEL) after the government banned trade of its e-series contracts of commodities such as gold and silver to ensure that the exchange first settles Rs 5,600 crore in dues to investors.
The NSEL, which had suspended trading of all other contracts on July 31, stopped the e-series contracts in the morning in anticipation of the government’s order, leading to a complete halt of operations on the exchange.
The e-series contracts allow retail investors to trade in gold, silver, copper, zinc, lead, nickel and platinum in demat form. The exchange has assured investors they can convert their demat stocks to physical form.
“We decided to stop trade in e-series as we want to see first NSEL settles the dues,” Food and Consumer Affairs Minister K V Thomas told PTI, adding that the government is trying its best to ensure that there is no panic among investors and that dues are paid.
Even as an estimated Rs 6,000-crore payment crisis continues to engulf NSEL, some stock brokers and portfolio managers have come under regulatory scanner for inducing HNIs and other investors to trade on spot market commodity exchange with promise of high returns.
Shares of Financial Technologies (India) Ltd (FTIL), the main promoter of NSEL, declined 20% on Tuesday, while group entity MCX fell 10%. E-series contracts are a unique market segment, which function like the cash segment in equities and offer commodities in demat form in smaller denominations. They contributed about 40 % of NSEL’s Rs 18,315 crore turnover in June.
To safeguard investor interest, the exchange said that “people holding stock can apply for converting to physical and the same will be facilitated by the exchange. People can also continue to hold the stock in demat form.”