In the high-profile NSEL scam, capital markets regulator Sebi is readying to act against five brokers found to be involved in irregular activities even as it has ruled out any ponzi-angle or collective investment scheme in the trading model of the erstwhile spot exchange. Sebi has also forwarded relevant findings of its inspection of the rule of the five brokers to Mumbai Police's Economic Offence Wing, Department of Revenue, Department of consumer Affairs, Directorate of Enforcement (ED) and the RBI for necessary action at their end. Sources said the markets regulator had also granted the concerned entities an opportunity of inspection of the relevant documents, after which they were asked to submit their replies to the Show Cause Notice issued by Sebi. "Replies from all the five brokers have been received and they are currently being examined by Sebi," a senior official said. National Spot Exchange Limited (NSEL) was incorporated as a company, with FTIL holding 99.98 per cent stake, with an objective of operating pan-India commodities spot exchange platform for which it obtained licenses under APMC Acts of various state governments to run spot exchange activities. It was also granted exemption by the government from the preview of the erstwhile Forward Contracts Regulation Act (FCRA) to conduct trading of one-day duration forward contracts subject to various conditions. The erstwhile Forward Markets Commission (FMC) was the statutory regulator under the FCRA and was functioning under administrative control of the Consumer Affairs Ministry. Later this administrative control was transferred to the Finance Ministry in September 2013. While NSEL was outside the domain of regulation of the erstwhile FMC, the government through notifications in February 2012 and August 2013 had assigned specific role to FMC to discharge certain responsibilities vis-a-vis NSEL. Before the merger of FMC with Sebi, the government also withdrew the exemption granted to NSEL from the FCRA provisions.\u00a0However, as on the date of FMC-Sebi merger, there was no notification in existence for observance by FMC with respect to NSEL and therefore Sebi did not have any role to discharge regarding NSEL, except for defending the interest of the erstwhile regulator and the central government in various litigations pertaining to the NSEL scam. At the time of merger, Sebi had sought clarification from the Finance Ministry with regard to its jurisdiction vis-a-vis NSEL matters and was told that Sebi will support the three- member committee set up by the Bombay High Court for effective recovery of investments from the defaulters of NSEL. Sebi was also asked to respond to and company if the directions of the courts with regarding to NSEL cases and was mandated to respond to agencies investigating into the NSEL related matters. You May Also Like To Watch: The Finance Ministry also asked Sebi to ensure its representation in the meetings held for reviewing the progress in NSEL issue.\u00a0At the same time, the Ministry also clarified that since spot markets and ready delivery contracts were not being regulated by FMC, Sebi was also not expected to take upon itself any regulatory function with regard to such markets.