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.

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