Indian based commodity exchange; the National Spot Exchange has suspended trading in financial derivatives and spot contracts. The move comes on the back of a government investigation by the Department of Consumer Affairs over short selling in contracts.
NSEL said in a statement Wednesday evening that it had suspended trading in forwards and delayed settlements of contracts for 15 days. India’s commodities regulator asked exchanges two weeks ago not to launch new forwards contracts on the back of falling volumes.
The exchange stated in a notification: “Trading in all contracts, except e-series contracts, stands suspended until further notice.”
Viberate Teams Up with Blockparty to Deliver World’s First Live Event NFTGo to article >>
NSEL is the largest spot commodities exchange in the BRIC nation.
The government crackdown has had a detrimental impact on both Financial Technologies and MCXs’ share price. Shares in Financial Technologies dropped 64.5% to INR 191.65, while MCX fell 20% to INR 510.5.
Investor sentiment has questioned the dilemma faced by NSEL and consequently impacted the share price of Financial Technologies. However, Jignesh Shah, Chairman & Managing Director of Financial Technologies, commented about FT’s position in a statement, he said: “ The action of NSEL does not entail any financial liability on FTIL and that the business at FTIL is as usual.”
NSEL has been established since 2008, the firm is operational in 16 States in India, providing delivery-based spot trading in 52 commodities.
The NSEL and two prominent Mumbai commodity brokers were unavailable to provide a comment.