Nearly 7,000 retail investors are in for some relief with the Forward Markets Commission (FMC), the commodity futures regulator that is trying to resolve the payment crisis at the National Spot Exchange (NSEL), deciding to first clear the dues of those who had put in Rs 10 lakh or less.
Under the plan, these investors will get their full amount that is due in one go. This, according to FMC sources, will take care of over half the investors who add up to 13,000 and are affected by a payment crisis after NSEL suspended trading last week.
"We have asked the exchange to directly settle the dues and give priority to small investors," said an FMC source, who did not wish to
Under the plan, these investors will get their full amount that is due in one go. This, according to FMC sources, will take care of over half the investors who add up to 13,000 and are affected by a payment crisis after NSEL suspended trading last week.
"We have asked the exchange to directly settle the dues and give priority to small investors," said an FMC source, who did not wish to
be identified. Investors who are entitled to get amounts higher than Rs 10 lakh will have to wait till the small investors are paid off, sources said. This group of investors, who are mainly high networth investors (HNIs), will probably be paid in a staggered manner as and when NSEL receives payments or realizes funds by liquidating commodities in warehouses, sources said.
As per FMC's plans, all the money it receives will first go into an escrow account and from there payments will be done.
Earlier in the day, the crisis-hit NSEL formed a committee of four eminent people with varied backgrounds to act as an independent body that would look into the whole settlement process post its troubles that started last month. The management of the exchange will report to this 'oversight committee'. The exchange is also working on putting in place two more committees - one constituting the planters and processors and one constituting the member-brokers - to better coordinate with the exchange for a smooth rollout of the whole plan.
On July 31, NSEL had said that it was suspending all trades on one-day contracts on the bourse from the next day and would also merge several days' settlement into one. Since the announcement led to a payment-default like situation, the government and the Forward Markets Commission (FMC), the regulator for all commodity derivatives trades in India, stepped in to resolve the crisis in which around Rs 5,500 crore worth of funds and commodities are involved. The setting up of the three committees is part of the coordinated effort by the parties involved in the situation.
The committee comprises Sharad Upasani, a retired IAS officer and a former chairman of the Company Law Board, Justice R J Kochar, a former judge of the Bombay High Court, G N Bajpai, former chairman of Sebi and D Sivanandan, a retired IPS officer who was once the director general of police in Maharashtra. "The exchange has constituted the committee for the purpose of monitoring the payout of dues as would be decided in consultation with FMC. The management of the exchange will report to this committee for implementation of the process," a release from NSEL said.
The two other committees are being formed for better coordination between the stakeholders in the spot trading business.
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