FMC allows financial closure of NSEL's e-series contracts

Commodity market regulator FMC today allowed scam-hit National Spot Exchange Ltd (NSEL) to convert e-series gold contracts into physical form -- a move that would benefit 33,000 investors.
NSEL, which is a subsidiary of Jignesh Shah-led Financial Technologies India Ltd, is grappling with a payment crisis for settling dues worth Rs 5,600-crore after it suspend trading activities in July last year following a government directive.
FMC permitted the finacial closure of the e-series contracts, which was already settled, as forensic auditors did not find anything adverse against such contracts.
"The Forward Markets Commission (FMC) has given its 'no- objection' for rematerialisation or financial closeout of NSEL's e-Series contracts," NSEL said in a statement.

Rematerialisation is the process by which a client can get his electronic holdings converted into physical certificates.
FMC has observed that "the forensic auditors report...Has not brought out any adverse finding with specific reference to the e-Series contracts on the basis of which prima facie any adverse inference can be drawn about the bona fide of the e-Series contracts which are already settled and only pending for rematerialisation/financial closure by the NSEL."

In a letter to NSEL, FMC said: "In view of the foregoing and to protect the interest of over 33,000 e-Series investors, the Commission has no-objection to rematerialisation/ financial closure of the e-Series contracts".

The regulator directed NSEL that while carrying out the rematerialisation/financial closure of e-Series contracts, a public announcement of such scheme should be made and also published on the website of the exchange.
The request for rematerialisation/financial closure shall be processed by the exchange after seven working days from the publication of such scheme, the FMC directed.
"The FMC has also observed that there was no settlement default in e-Series contracts and physical stock of the metal matched with the stock data of custodians/depositories," NSEL said in a statement.
NSEL promoter FTIL is under investigation by multiple agencies after a major payment crisis broke out last year.

FMC has declared FTIL unfit to run any exchange and has asked to reduce its stake in MCX to 2 per cent from current 26 per cent.
FTIL has invited expression of interest for selling up to 24 per cent stake in its commodity exchange MCX.
Recently, capital market regulator SEBI declared FTIL as unfit to hold a stake in any stock exchange or clearing corporation and gave it 90 days to sell its holdings in such entities.