New Delhi: Amid the crisis on the National Spot Exchange Ltd (NSEL), the government on Thursday said it is preparing new regulations for spot exchanges that offer electronic platforms for trading in commodities.
"The government is working on new regulations for spot exchanges. A rough draft is ready," Consumer Affairs Secretary Pankaj Agarwal told PTI. "It is a document of regulations, not a bill. We do not know what shape it will take. There could be a separate legislation or through executive orders a commission could be set up."
The country has three commodity spot exchanges -- NSEL, NCDEX Spot Exchange and National APMC Spot Exchange. While there is no separate regulator for these spot exchanges, they have been given certain exemptions to operate under the Forward Contract Regulation Act (FCRA), Agarwal said.
NSEL, promoted by Financial Technologies India Ltd (FTIL) and National Agricultural Cooperative Marketing Federation, said late July 31 it had suspended trading of contracts, other than e-series contracts, till further notice. The exchange also decided to merge the delivery and settlement of all pending contracts and deferred them for 15 days.
The move to suspend trade in all contracts, except for 'e-series' products like gold and silver, came a fortnight after the government asked NSEL not to launch new contracts.
The Forward Markets Commission (FMC), which regulates commodity futures, is probing the NSEL's trading suspension.
Asked if the NSEL crisis would affect the commodity markets, Agarwal said, "We will get to know about its impact after we get detailed information about the list of common brokers and clients of NSEL."
A "complex situation" has arisen due to the NSEL problem and its spillover on the commodity markets would be known only after four days to a week, he said.
Shares of FTIL and group company Multi Commodity Exchange of India Ltd (MCX) have fallen sharply in the past two days. FTIL was the biggest loser on the BSE for the second day on Thursday, declining 21.12 percent to Rs 151.25.
"If NSEL is not doing well, obviously it will reflect on the shares of FTIL because the spot exchange contributes more than 50 percent to the profit of FTIL. Same is in the case of MCX," Agarwal said.
Commodity brokers plan to meet the secretary to discuss ways to protect the interests of investors. They met NSEL officials yesterday.
First Published: Friday, August 2, 2013, 20:47