Indian Commodity Exchange NSEL Suspends Trading after Government Investigation

Indian based commodity Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term; 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.”

NSEL is owned by one of India’s largest financial services technology firms, Financial Technologies (FT) who also owns MCX as well as a range of overseas exchanges including SMX, DGCX, GBOT and BFX.

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.