Even as the National Spot Exchange (NSEL) ? under the supervision of the Forward Markets Commission (FMC) and the government ? is busy finalising the settlement calendar to clear all outstanding positions, market participants feel that it would take a minimum of 2-3 months for the process to be completed.
According to the head of a large brokerage that deals with NSEL, some processors have expressed practical difficulties in clearing the outstanding position before at least 2-3 months. This would come as a big setback to the spot exchange that has assured the government and the investors that the settlement calendar would be announced on August 14 and the money will be paid as soon as possible.
?Bulk of the money is owed by the processors and some of them have said that they will be able to repay only after the processing (of the commodity) is completed. For instance, a cotton processor has said that he needs time to process the cotton and then export it. He will repay after he gets the money from the importer,? said a person familiar with the NSEL matter.
Incidentally, NSEL has already stated that there are eight members/ processors ? with a total outstanding amount of R2,181 crore ? that are willing to pay as per the scheduled due date or even earlier.
Further, there are 13 members/processors, who have offered to pay 5 % of their total dues every week, if the same is agreed upon. The total outstanding amount of these entities is pegged around R3,107 crore, according to NSEL. Meanwhile, the commodity market regulator?s plan of settling the dues of retail investors (entities that have an outstanding of less than R 10 lakh) before other entities is also not going down well with some of the ?big players?, say sources.
?Right now, everyone is waiting for August 14 when the settlement calendar or methodology will be announced. It could lead to fresh issues with many questioning the preferential treatment. It would take a minimum of two months for the matter to be resolved assuming there are no defaults,? said the brokerage head. Interestingly, the FMC has already hinted that it would act tough against entities that do not co-operate in the settlement schedule.
?FMC officials have also asked for details of members and other participants who are not cooperating with the exchange in resolving the matter related to settlement cycle,? stated a recent release by NSEL. According to market sources, representatives of a processing firm that owes the exchange over R200 crore met with FMC officials on Monday. The regulator is believed to have summoned the entity to ensure that the payment is made according to the schedule.