NSEL commences financial closure of e-series contracts

Crisis-hit NSEL today commenced the financial closure of those e-series contracts which have not been re-materialised by investors.
The exchange also said it will invite bids to sell the stock traded under e-series contracts and make payment to investors who have not rematerialised their contracts.
The re-materialisation is the process under which investors can convert their electronic holdings of metals into physical form.
In the wake of the Rs 5,600 crore payment default at FTIL promoted National Spot Exchange Ltd (NSEL), government had in August last year banned trading in e-series contracts in metals.
Financial Technologies (India) Ltd and Multi-Commodities Exchange (MCX) promoter Jignesh Shah and former MCX head Shreekant Javalgekar were arrested yesterday in the NSEL case, seven months after an FIR was lodged.

In March this year, regulator Forward Markets Commission (FMC) had given permission to NSEL for re-materialisation and financial close-out of e-series contracts.

In a circular, NSEL said that the exchange has completed the re-materialisation process on April 28 and will commence the process of the 'Financial closure' from May 8.
The exchange said it will start close out all free units of e-series contracts as on May 2. For this purpose, it will invite bids from prospective buyers for the metal underlying such e-Series units, it said.
NSEL said the proceeds from sale of metal will be credited to the respective unit holders holding free balance.

The payment instructions will be made to banks for payout to unit holders on the same day on which the payment is received as per schedule of receipt of funds from the winning bidders, it said.
Payment will be made to the unit holders on the basis of their holding in the proportion of the amount of metal sold to the total quantity of metal available for Financial Closure, it added.
NSEL had introduced e-series contracts in commodities for retail investors in 2010. These are investment products that enable investors to buy and sell commodities in demat form and hold them in their demat account.

Close to 33,000 investors had invested around Rs 525 crore in NSEL's e-series contracts.