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Finance ministry sends show-cause notice to NSEL

LiveMint logoLiveMint 03-06-2014 Ashish Rukhaiyar

Mumbai: The finance ministry has issued a show-cause notice to the National Spot Exchange Ltd (NSEL), asking why the exemption granted to the spot exchange in 2007 should not be revoked.

The exemption refers to the decision of the department of consumer affairs that kept one-day forward contracts on NSEL outside the operation and provisions of the Forward Contracts (Regulation) Act under section 27 of the law.

In simple words, the Forward Markets Commission (FMC) does not have any regulatory powers over the trading operations of NSEL, which is currently engulfed in a `5,574.35-crore payments crisis. On 14 August, 2013, NSEL proposed a payout plan, but it has been unable to stick to the schedule.

A spokesperson from the exchange confirmed the receipt of the notice and said NSEL’s response will be sent within 15 days.

“Yes, NSEL has received this letter from the ministry of finance. We understand from media reports that similar letter has been issued to other spot exchanges as well. This letter does not discard the response given by NSEL regarding the show cause notice issued in April 2012. The letter will be placed before the board for appropriate advice and next action. We are examining the letter and as per the deadline given, we will respond in 15 days’ time,” said an exchange spokesperson in response to a Mint query.

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