The Forward Markets Commission has instructed the troubled National Spot Exchange not to make any settlement to members of the Indian Bullion Market Association.

Ramesh Abhishek, Chairman, Forward Markets Commission, said the members of the Indian Bullion Market Association hold substantial equity stake in the exchange.

“After analysing the data provided by the exchange we have found that the members of the Association have trading exposure in the exchange,” he said.

Following this, the exchange has been advised not to make any settlement to the members of Association which is NSEL’s related entity. Besides, FMC has also called for details on the members and traders associated with the Association.

“We are not faulting anybody, as yet. We want to ascertain the facts and give direction to the exchange where we find some mismatch. The exchange already has a well laid down by-laws to follow on the settlement process,” he said.

In 2009, NSEL had formed Indian Bullion Market Association in an attempt to create a trading entity on the lines of The London Bullion Market Association, the international setter of gold prices. The Indian Bullion Market Association comprises bullion dealers and jewellers.

It is reliably learnt that the Association members have equity holding of 60 per cent in NSEL and trading exposure of about Rs 1,100 crore in the exchange.

When IBMA was formed with an authorised share capital of Rs 20 crore, NSEL held the majority stake. Bullion dealers and jewellery merchants also became stakeholders. Jewellers and merchants stakeholders invested a minimum of Rs 5 lakh and a maximum of up to Rs 40 lakh in the company’s share capital. The objective of IBMA was to create a benchmark Indian spot price for bullion.

> suresh.iyengar@thehindu.co.in

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