As directed by the Forward Markets Commission (FMC), the crisis-hit National Spot Exchange (NSEL) has uploaded the detailed party-wide data on pay-in and pay-out obligations. According to the latest data, a total of 24 entities owe R5,574.35 crore to the exchange, which, in turn, has to settle the dues of 148 entities totalling Rs 5,380.53 crore.
Data further shows that some large domestic brokerage firms, along with a couple of government-owned trading entities, have the largest exposure with the exchange. Interestingly, the recent past saw these brokerages coming together to demand a speedy settlement process.
According to NSEL, government-owned MMTC and PEC collectively have an exposure of Rs 343 crore, with brokerages like Anand Rathi Commodities, India Infoline Commodities, Geojit Comtrade, Motilal Oswal Commodities, Phillip Commodities India, and Emkay Commotrade all having an exposure of over R100 crore each.
The Indian Bullion Market Association (IBMA) has the maximum exposure of R1,159.55 crore, but the commodity markets regulator has directed NSEL against making any payment to IBMA, since it is related to NSEL, which has 60.88% equity and common directors in IBMA.
Meanwhile, the entity with the largest payment obligation with the exchange is N K Proteins, with a liability of R967.15 crore. Interestingly, the NSEL announcement also states that the firm has refused to fulfill its obligations and the financial liability will be met by the sale of its assets. Another member ? Lotus Refineries ? has refused to honour its liability of R252.56 crore.
The detailed announcement comes just a day before the exchange is scheduled to initiate its pay-out obligation of R174.72 crore per week for a period of 20 weeks. This would be followed by R86 crore of settlement for the next 10 weeks. According to NSEL, until March 11, 2014 there will be payouts to the investors every Tuesday.
The NSEL disclosures also come close on the heels of the FMC pulling it up for submitting a settlement plan that, according to the regulator, ?does not inspire confidence? and raised ?serious doubts on credibility of the commitments made by buyers.?
The regulator was also miffed with the fact that the exchange stated that the settlement of trades were dependent on the realisation of funds from the payable members. ?… exchange appeared to have dis-owned its responsibility of guaranteeing the financial settlement. Whereas the exchange has the sole responsibility of settlement of trade on the exchange as per the pre-announced settlement schedule and it cannot simply depend upon the realisation of pay-in obligation from buyers,? stated a letter written by FMC last week.
BJP leader smells rat
BJP leader Kirit Somaiya on Monday alleged that more than 80% of the entities that owe money to NSEL are bogus companies, with some of them formed only few months earlier. Addressing the media here, he further alleged that the government, along with regulators like FMC and Sebi, should explain why there is such a delay in acting against NSEL and its promoters and senior management. ?All regulators are silent and supporting the scam… why the accounts of these entities have not yet been frozen and assets not yet seized,? he asked, adding that he will soon file a PIL in the Bombay high court. He further stated that he will name the Consumers Affairs Ministry as one of the respondents.