FMC asks NSEL to rejig committee for auction

Written by Press Trust of India | New Delhi | Updated: Dec 3 2013, 20:15pm hrs
NSELFMC asked NSEL to reconstitute the committee set up to oversee auction-cum-bidding process.
Commodity markets regulator FMC on Monday asked crisis-hit NSEL to reconstitute the committee set up to oversee auction-cum-bidding process and give more powers to the panel to monitor the entire cash flow.

Two months ago, the Forward Markets Commission (FMC) had asked the bourse to set up a committee to oversee auction-cum-bidding process of stocks at warehouses of National Spot Exchange (NSEL), which is engulfed in a payment crisis of R5,600 crore after the exchange was shut following a government order due to violation of some norms.

In a fresh directive to NSEL, the FMC has asked the bourse to re-designate the committee as Monitoring-cum-auction Committee with extra functions.

Besides monitoring the entire cash flow of NSEL, the panel would assist FMC in ensuring that NSEL does not dispose of or create third party rights on any of its assets without the written permission of the regulator.

In case of immovable properties, NSEL cannot dispose of any without the court order.

According to the FMC, the panel would also assist and advise the regulator on a matter related to distribution of exchange fund utilisation, margin money, value added tax (VAT) lying in NSEL escrow account.

The committee would also suggest action to be taken regarding the recovery of money from borrowers or any other source by NSEL and its distribution among its investors.

The regulator has also asked the NSEL to reconstitute the existing panel with three members from NSEL Investors' Forum and one member each from Commodity Participants Associations of India, Association of National Exchanges Members of India and BSE Brokers Forum.