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Home >Opinion >Online Views >The NSEL debacle: seven questions for the government

The National Spot Exchange Ltd (NSEL), promoted by Jignesh Shah, has been in the eye of the storm for the last three months. Having exceeded its brief in offering forward contracts, including some without any underlying commodity, the exchange is now in the mid of a massive payment crisis. Even as NSEL unravels, here are seven questions related to the root of the problem, that the regulators and the government need to answer:

1) Why was National Spot Exchange Ltd granted an exemption from regulatory scrutiny?

2) Why did the government take over a year to clamp down on NSEL’s trading, despite having received complaints from the Forward Markets Commission (FMC) in 2012?

3) Why is NSEL still being run by its erstwhile promoters, and why are the warehouses still under its control or of its customers, when mis-governance has been proved beyond doubt?

4) How is it that the promoters of NSEL have been able to get away with false/inconsistent statements and promises since the debacle broke?

5) Given that the fact that the exchange was offering a forward contract (which automatically should have brought it under the FMC scrutiny) was well known, why did no arm of government act until now?

6) Why are no serious questions being asked by the regulatory and investigative arms of the government on the governance and risk management of the exchange?

7) Isn’t it curious that most of the defaulting members on the exchange seem to be obvious “shell" companies, some specifically set up for no other purpose but trading on NSEL? And why is nothing being done about this?

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