National Spot Exchange (NSEL) in a press release said it has suspended trading in one day foward contracts in all securities except E-series which primarily deals with gold, silver and platinum contracts.
The bourse plans to merge all contracts and settlement of these contracts after 15 days. For the next 15 days there will not be any trading in contracts except for the E-series. The positions outstanding in these contracts will be settled by way of delivery or cash payment after expiry of 15 days. The exchange will subsequently come out with the date when the settlement is going to happen.
The action taken by NSEL basically translates to almost all volumes or turnover of the exchange coming to a standstill or near zero. E-series contracts do not have much volumes on the exchange. It is hardly Rs 3-4 crore and the turnover of the exchange has anyways fallen from roughly around Rs 800-900 crore a day to nearly Rs 300 crore because of the actions taken by the Ministry of Consumer Affairs.
The Ministry of Consumer Affairs has come up with an order asking NSEL not to show any further contracts which violate the Forward Contracts Regulation Act (FCRA). As a result of which NSEL was supposed to give an undertaking to the Forward Markets Commission (FMC) on the same and that has led to a fall in volumes.
Many of these contracts which NSEL was issuing had deliveries or settlement after 11 days and that was the issue which was a big problem with NSEL and because of that norm all contracts which had settled intraday will have to be settled within 11 days.
The bourse plans to merge all contracts and settlement of these contracts after 15 days. For the next 15 days there will not be any trading in contracts except for the E-series. The positions outstanding in these contracts will be settled by way of delivery or cash payment after expiry of 15 days. The exchange will subsequently come out with the date when the settlement is going to happen.
The action taken by NSEL basically translates to almost all volumes or turnover of the exchange coming to a standstill or near zero. E-series contracts do not have much volumes on the exchange. It is hardly Rs 3-4 crore and the turnover of the exchange has anyways fallen from roughly around Rs 800-900 crore a day to nearly Rs 300 crore because of the actions taken by the Ministry of Consumer Affairs.
The Ministry of Consumer Affairs has come up with an order asking NSEL not to show any further contracts which violate the Forward Contracts Regulation Act (FCRA). As a result of which NSEL was supposed to give an undertaking to the Forward Markets Commission (FMC) on the same and that has led to a fall in volumes.
Many of these contracts which NSEL was issuing had deliveries or settlement after 11 days and that was the issue which was a big problem with NSEL and because of that norm all contracts which had settled intraday will have to be settled within 11 days.
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