OPEN APP
Home / Market / Stock-market-news /  FMC files caveat in SC to ensure no ex-parte order in FTIL case

Mumbai: The Forward Markets Commission (FMC) has filed a caveat in the Supreme Court, anticipating that Financial Technologies (India) Ltd (FTIL) may approach the apex court for an interim stay on the regulator’s December order declaring the company unfit to run any exchange in the country.

FMC, the commodities future market regulator, wants to ensure that no ex-parte order is passed by the Supreme Court in the case, according to two people familiar with the matter who spoke on condition of anonymity.

Last week, the Bombay high court rejected FTIL’s plea against the FMC’s order, which came in the wake of a 5,574.34 crore payments crisis at the National Spot Exchange Ltd (NSEL) that surfaced on 31 July.

FTIL denied any plans to approach the apex court.

“We would like to categorically deny that FTIL has any plans to approach the apex court against FMC order as the matter is pending before the Bombay high court and is sub judice," said a spokesperson for FTIL. Irregularities at NSEL came to light on 31 July when the exchange abruptly suspended trading in all but its e-series contracts. These, too, were suspended a week later. The closure of trading may have been prompted by an instruction from the ministry of consumer affairs asking the exchange 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 the 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 payout plan, but it has been unable to stick to the schedule and has not made a single fully payout since.

Separately, the capital markets regulator Securities and Exchange Board of India (Sebi) has asked FTIL to file a written submission presenting its case on a show-cause notice issued by Sebi in December.

Sebi sent FTIL the notice asking it why it should not be barred from holding a stake in stock exchanges and clearing corporations, in the light of the FMC’s order.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Close
Recommended For You
×
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout