The exchange that short-changed

The National Spot Exchange (NSEL) fell short on several counts. It fell short of cash. It fell short of goods. It fell short of governance standards. It fell short of margins. It even fell short in its settlement guarantee fund. To sum it up, it fell short of being an exchange - leaving hapless investors short-changed. But, in the early days of the crisis, Anjani Sinha, former MD &CEO, ensured it never fell short of statements. Sinha assured "all is well" in messages to worried investors and at public fora. He filed an affidavit taking responsibility for the debacle and absolving promoters and directors. Some 95 days after the government issued a missive that triggered the end, Sinha was arrested and filed a fresh affidavit sparking hopes of a respite for investors and, possibly, limiting Jignesh Shah's room for manoeuvre. Business Standard presents the story so far.

June 5, 2007: Ministry of Consumer Affairs issues notification granting conditional exemption to one-day forward contracts traded on NSEL

February 6, 2012: FMC notified as designated agency to ask for information and oversee conditions enumerated in the 2007 ministry notification

February 22, 2012: FMC seeks clarifications from NSEL on contracts with long delivery periods and short sale of commodities

February 29, 2012: NSEL replies to FMC letter

April 10 , 2012: FMC writes to ministry, saying NSEL has violated conditions laid down under the 2007 notification

April 8 , 2012: Ministry issues showcause notice to NSEL

May 29, 2012: NSEL replies to showcause notice

May 31 , 2012: Ministry seeks FMC comments on NSEL response

August 2 , 2012: FMC gives comments reiterating the violation of conditions by NSEL

March 2013: Turnover on the platform zooms from a few hundred crore to Rs 73,390 crore in FY 13. 97 per cent trades in controversial paired contracts

July 12: Ministry of Consumer Affairs seeks undertaking from NSEL that no new contracts will be launched and existing contracts would be settled on their due dates

July 15-22: Financial Technologies shares crash amidst concerns over insufficient stocks; company blames "rumours"; NSEL made delivery period of all contracts T+10, making these "trade to trade"

July 31: NSEL announces suspension of all contracts other than e-series, says settlement will be done in 15 days.

August 1: FMC pulls up Anjani Sinha and seeks details; as Sinha is unable to give details, FMC summons Jignesh Shah and other directors

August 4: NSEL releases names of borrowers and says some have agreed to pay and negotiations are on with others. Tells investors settlement guarantee fund is Rs 62 crore as against Rs 850 crore declared earlier.

August 6: Ministry amends 2007 notification, making FMC responsible for settlement of NSEL contracts. Directs suspension of trade in e-series contracts

August 13: Jignesh Shah and Joseph Massey, both directors of NSEL, express doubts about the existence of sufficient stocks in warehouses; try to distance themselves from the affairs of NSEL

August 14: One day before the settlement date, NSEL announces a staggered settlement plan spread over 30 weeks. It would receive a periodic payment of Rs 5,574.35 crore from 24 members and pay out Rs 5,380.53 crore to 148 members who would, in turn, pay it to some 13,000 investors; exchange issues statement whereby Anjani Sinha takes "sole responsibility" for all its affairs

August 16: FMC writes to NSEL about various failures of the exchange and directs appointment of Swiss audit firm SGS to take stock of warehouses and report on allegations of insufficient goods. Orders forensic audit by Grant Thornton

August 20: NSEL cannot comply with its own calendar, defaults on first payout as it can make a payment of Rs 92.12 crore as against the scheduled Rs 174.72 crore. Anjani Sinha and six officials sacked; P R Ramesh, former Sebi official, is appointed officer on special duty

August 27: FM announces two panels under Arvind Mayaram to probe the NSEL payment crisis; representatives of multiple agencies part of the panel; FMC says "fit and proper" criteria of MCX promoters under watch

September 7: Anjani Sinha files detailed affidavit explaining the functioning of the exchange, dealings with borrowers and role of key officials, etc. He blames corrupt junior officials but tries to absolve board and promoter Jignesh Shah

September 15: Sebi grants conditional renewal to the licence of MCX Stock Exchange but asks shareholders to convene EGM and reorganise board

September 23: Mayaram panel submits its report. Several recommendations on systemic issues, violations under various laws detailed in the report

September 26: FM says NSEL was unregulated and violated laws from day one, says investors went in with "open eyes", says respective agencies will probe violations; action hots up

October 4: FMC issues "fit and proper" notice to Jignesh Shah, Joseph Massey, Shreekant Javalgekar and Financial Technologies, gives two weeks' time for responses

October 9: FMC moves to clean up MCX board; Joseph Massey and Jignesh Shah resign from MCX-SX board; Amit Mukherjee of NSEL's business development team arrested

October 10: Jai Bahukhandi, warehouse manager at NSEL, arrested

October 17: FMC appoints four new directors on the MCX board; Mumbai police get clearance to apply the Depositors in Financial Establishments Act; Anjani Sinha arrested

October 18: Anjani Sinha files fresh affidavit implicating Jignesh Shah and board members

Sources: FMC showcause notice, fmc.gov.in, NSEL and news reports