INSUBCONTINENT EXCLUSIVE:
MUMBAI: A Mumbai police arm dealing with financial crimes has called about 100 brokers to ascertain their alleged roles in illegal contracts
traded on the National Spot Exchange (NSEL), taking forward the probe into a complaint of mass irregularities at the mothballed commodities
bourse.
The Economic Offences Wing (EOW) has already questioned about 15 of these brokers in the past two days, official sources told
registered a case against 300 brokers in November
These brokers were participants on the NSEL and allegedly bypassed key provisions of the law that permitted the decommissioned exchange to
offer contracts valid only for a day.
The exchange, however, allegedly permitted clients to enter into pair trades with 24 counterparties
In the first leg, the client purchased a commodity contract from one of the 24 counterparties on a trade plus two day basis (T+2), through
In the second leg, the client sold the contract back to the counterparty on a T+25 day basis at a higher price, which meant this was a
futures trade and not a spot contract.
The ministry of consumer affairs, which regulated trading in commodity futures through an agency,
exempted NSEL from relevant provisions of the Forward Contracts Regulation Act (FCRA) as long as the contracts were of one-day duration and
not short-sold .
The then UPA government directed NSEL to suspend trading for violating the 2007 circular for spot exchanges in July
2013.
This caused the exchange to go belly-up since commodities underlying the contracts were absent in almost all the cases.
