REASONS WHY FTIL & NSEL SHOULD NOT BE HELD

RESPONSIBLE FOR THE NSEL CRISIS

CONTENTS

INTRODUCTION

LEGAL FACTS

ROLE OF TRADING CLIENTS

INTEGRITY OF NSEL

LEGITAMACY OF NSEL’S CONTRACTS

INTRODUCTION

There are many updates and follow-ups on NSEL Crisis.

So, if you are following the news & keeping a track of the NSEL Crisis, then here are facts that demonstrate that NSEL & FTIL are not the wrongdoers in the crisis.

LEGAL FACTS

Investigating agencies – EOW, CBI and ED haven’t found any money trail to NSEL or FTIL.

The same was stated by the Bombay High Court order dated 22 August 2014

NSEL did not receive the money that was invested. It is brokers & defaulters who have been benefited by transactions.

All of the Trading Clients’ funds have been traced to the defaulters.

NSEL has never paid any dividend to FTIL. All dividends are always paid from standalone income and as is the case with FTIL.

TRADING CLIENTS OF NSEL

Traded in commodities through their brokers.

Consciously selected counterparty, paid/received VAT and have acted as clearing and forwarding agents.

Brokers of Trading Clients visited warehouses to verify commodities and found them to be in order on various occasions.

Have no privity of contract with NSEL but is with Brokers.

TRADING CLIENTS ARE NOT INVESTORS

They are entitled to recover dues through legal means without incorrectly projecting themselves as “Investors”.

The exchange did not pay any ‘interest’ to the trading clients’ brokers, hence the TCs are not “investors”.

NSEL was simply the means of exchange. Neither did NSEL’s creditors nor did the Trading Clients invest in the company’s FDs/Debentures. Hence the two parties cannot be deemed as investors.

INTEGRITY OF NSEL

Propaganda that NSEL was incorporated to defraud Trading Clients is with malice, baseless and false.

NSEL was set up by MCX on invitation of Government of India (GoI) and not by FTIL as alleged.

NSEL is a demutualized organization/exchange in which the ownership & management are totally separated.

Exempted under Section 27 of the FC(R) Act was given by GoI to 3 spot exchanges NMCE, NCDEX and NSEL.

NSEL IS NOT A FRAUD

NSEL and NCDEX launched contracts beyond 11-day maturity as the exemption granted was a ‘general exemption’ under Sec 27 of the FCRA.

Like other subsidiaries of FTIL, NSEL was also managed by a well-qualified and experienced Managing Director and CEO Anjani Sinha and a group of senior officials having adequate experience in commodities markets.

NSEL IS NOT A FRAUD

No complaints were made by any of the participants who were trading on the platform of NSEL

It is relevant to note that at no point in time were any instances of alleged fraud were ever brought to the attention of the Board of Directors of FTIL.

In an affidavit in Writ Petition 2340/2013, the Department of Consumers Affairs (DCA) admitted that it has not determined whether NSEL violated any conditions.

 LEGITAMACY OF NSEL’S CONTRACTS

Acted as a pass through mechanism.

Launched “independent” forward contracts

Did not receive any benefit save and except to the extent of transaction charges by the exchange against the transaction.

CONCLUSION

NSEL did not receive the money that was invested.

The role of the trading clients is a complete contrast to the one that was portrayed.

Propaganda that NSEL was integrated to defraud Trading Clients is baseless.

These are just a few updates, continue following us for more details about NSEL Crisis.

Thank You