The finance ministry has extended the NSEL probe to other exchanges where the entities involved in the R5,600-crore payment fiasco are operating.
A senior finance ministry official told FE that the Securities and Exchange Board of India (Sebi) has already been asked to investigate whether any company or member associated with the NSEL dealings has indulged in malpractices in the stock exchanges. “A similar exercise will be carried out by the Forward Markets Commission (FMC) also in the commodity exchanges,” he added.
The official added that cross-cutting ownership may create problem in other exchanges considering the way NSEL handled its operation, and the ministry wants to rule out any such possibility.
“With FMC been shifted to the Department of Economic Affairs (DEA), we are examining regulatory and legal violations involved in the case. At DEA, we are also examining the systematic risks caused for other exchanges due to cross-holding of the same group (Financial Technologies)”.
The DEA has asked FMC and Sebi to examine the systematic risk the parent company might have for other trading platform such as commodity and currency exchanges, he said.
“We have an apprehension that cross-cutting ownership by the company across different exchanges might highlight similar violations. We have asked FMC and Sebi to dig further to investigate the operations at other platforms. We have to find out whether similar violations have been happening at other exchanges,” said the official.
The two groups appointed under DEA secretary Arvind Mayaram are expected to hold their final meeting now on September 18 to decide on the future course of action by different government agencies, including the Enforcement Directorate, Income-Tax Department and the Serious Fraud Investigations Office (SFIO).
The FMC would also assess the quantum of settlement and guarantee funds in other commodity exchanges in the backdrop of NSEL payment problem.
The ministry has ultimately planned to merge FMC with Sebi, but that is not happening in the near future as changes would have to be made in the law for this, which would be possible only after the new government comes at the Centre.
“All financial products should be regulated by the same