Sources familiar with the development say there are only nine brokerages that have an exposure of over Rs 100 crore with NSEL and their combined outstanding is pegged at around Rs 2,500 crore. This is nearly 45% of the total outstanding of Rs 5,574 crore as stated by the spot exchange.
Sources, however, also add that the entire exposure of brokerages is not on account of proprietary trading and a large portion can be attributed to trades done on behalf of their respective clients. Regulatory loopholes allowed brokerages to aggressively market NSEL products, which lured investors with assurances of returns much higher than other investment options.
As per sources, brokerages with an exposure of over Rs 100 crore include Anand Rathi Commodities, India Infoline Commodities, Geojit Comtrade, Systematix Commodities Services, Motilal Oswal Commodities Broker, AUM Commodity, Phillip Commodities India, Purvag Commodities & Derivatives and Emkay Commotrade.
While the outstanding exposures of the brokerages could not be independently confirmed, heads of some of the brokerages have clarified earlier that they do have an exposure in NSEL due to proprietary trades and also trading done on behalf of their clients. They, however, refused to divulge outstanding exposure, citing client confidentiality clauses.
For instance, India Infoline, in a stock exchange announcement, stated that it does not have any proprietary positions nor has it funded any client positions on NSEL, but did not clarify if it has any outstanding positions on behalf of clients.
Incidentally, the Securities and Exchange Board of India has already sought details from various brokers about their direct and indirect exposure to NSEL. The capital market regulator wants brokers to ensure that their exposure to NSEL is secured by sufficient collateral and any problems on that front do not affect the liquidity position for their brokerage operations in equity, currency and other segments.
Meanwhile, commodity markets regulator FMC has asked crisis-ridden NSEL to go ahead for the time being with its plan to settle Rs 5,600 crore of dues to investors and questioned the credibility of the accounts and information provided by the exchange.
On August 14, the National Spot Exchange had submitted the plan to the Forward Markets Commission to clear dues to 13,000 investors over a period of seven months. Noting that the NSEL's settlement plan does not inspire confidence, the FMC asked the exchange to go ahead with your settlement plan for time being as the payouts are already seriously delayed, which is causing deep anxiety and resentment among the sellers.
The FMC came down heavily on the NSEL for
not taking guarantees for the financial settlement and providing different sets of information at different times. The credibility of information given and the books of account/records maintained by NSEL have raised serious doubt on its authenticity. You (NSEL), are therefore directed to appoint a forensic auditor firm to establish the credibility of books of account, record maintenance by the exchange in next seven days, the regulator said in a letter to the NSEL.
The FMC directed the exchange to appoint the auditor with its consent. The NSEL has also been asked to update the amount deposited in the escrow account on a daily basis to the regulator and on its official website.