The embattled National Spot Exchange has refuted commodity market regulator Forward Markets Commission’s observation on the slow process of recovery from defaulters.
In a response to FMC comment, Saji Cherian, Managing Director & CEO, NSEL said that the presence of brokers in the Monitoring and Auction Committee, which was wound by the regulator recently, resulted in conflict of interest as the committee was overseeing the recovery.
Incidentally, the investigating agencies are examining the role of brokers in the Rs 5,600-crore trade settlement default in the exchange, said NSEL.
NSEL believes that if FMC exercises the authority vested in it by the Government of India Gazette notification dated August 6, 2013 and takes such measures as it deems fit against the defaulting members, it will enhance the recovery efforts.
The exchange till date distributed to clients Rs 540 crore which includes Rs 179.25 crore raised through bridge loan from the promoter Financial Technologies. This has benefited 12,735 trading clients. Further, 33,000 e-series investors have received Rs 296.43 crore, which accounts for 98.6 per cent of total value of e-series metal contract.
NSEL has filed five arbitration petitions in Bombay High Court, 27 applications in Maharashtra Protection of Interest of Depositors court and 30 complaints with the Magistrate Court with regards to cheque bouncing case. The bourse has also filed 20 complaints in Economic Offences Wing of Mumbai Police which have not yet been registered as FIR.
The directors of Financial Technologies have approved financial support to the exchange for administrative expenses, including cost of recovery measures such as advertisements, legal cases and technology support. FMC was apprised of the recovery efforts undertaken through detailed weekly report. NSEL has adequate staff strength and expert human resources to assist in recovery, it said.
At the current stage the recovery is led by the Court, Competent Authority and Court-appointed committee. Nevertheless, the exchange is committed towards the process of recovery, it added.