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Mumbai: The economic offences wing (EOW) of the Mumbai Police on Tuesday said the Maharashtra Protection of Interests of Depositors (MPID) court is set to appoint a competent authority to initiate liquidation of assets attached in connection with the 5,574.35 crore payments crisis at the National Spot Exchange Ltd, or NSEL. The appointment is likely to happen this week.

So far, the EOW has attached properties worth 5,432 crore in the case. This is 97.4% of the total dues of the commodities spot exchange.

The crisis at NSEL first came to light on 31 July last year when the exchange abruptly suspended trading in all but its e-series contracts. These were suspended a week later.

The closure of trading 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.

All trading on NSEL, it later emerged, happened in paired contracts, with investors, through brokers, buying a spot contract and selling a futures one for the same commodity. They pocketed the difference—around 18%.

The entities selling on spot and buying futures were planters or processors and members of the exchange. It turned out there were 24 of them, and they used the paired contracts as a way to raise easy money. When trading was suspended, the investors were left holding contracts the members couldn’t buy because they didn’t have the money to do so. On 14 August, NSEL proposed a payout plan, but it has been unable to stick to the schedule.

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