Home / Companies / NSEL investors ask police to attach FTIL assets

Mumbai: Investors in the beleaguered commodity exchange National Spot Exchange Ltd (NSEL) have called for stronger action by the Economic Offences Wing (EOW) of the Mumbai police against Financial Technologies (India) Ltd (FTIL), in the 5,574.34 crore payment crisis. FTIL holds 99.99% stake in NSEL.

In a letter to the Mumbai Police commissioner, NSEL Investors’ Action Group has alleged that FTIL is the “mastermind and beneficiary" of the NSEL fraud. The investors have also questioned the EOW over not naming FTIL as an accused in the fraud.

“We now request you to immediately invoke MPID Act on FTIL and attach all their assets as they are stripping their assets by sending money overseas to toher subsidiaries and also believed to be rampantly laundering money by bogus purchase/expenses etc," said the NSEL Investors’ Action Group.

On 31 July last year, what was then considered a settlement crisis at NSEL came to light when the exchange suspended trading in all but its e-series contracts. E-series contracts were meant to allow retail investors to buy and sell commodities in dematerialized form. These, too, were suspended a week later.

The suspension may have been prompted by an instruction from the ministry of consumer affairs to the exchange, asking it not to offer futures contracts. A spot exchange isn’t supposed to do so, but NSEL was doing that. NSEL tried to implement the change, but because its appeal was to investors and members who were not interested in spot trades, it eventually had to suspend all trading.

It later emerged that all trading on NSEL happened in paired contracts, with investors, through brokers, buying a spot contract and selling a futures one for the same commodity. The entities selling on spot and buying futures were planters or processors and members of the exchange. It turned out there were only 24 of them, and they used the paired contracts as a way to raise easy money. When the trading was suspended, the investors were left holding contracts that the members couldn’t buy because they didn’t have the money to do so.

On 14 August, NSEL proposed a pay-out plan, but it has been unable to stick to the schedule.

While NSEL has managed to refund investors in its e-series contracts and a small fraction of the regular investors, roughly 5,334.31 crore of investor money remains stuck.

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