What was the NSEL Crisis?
National Spot Exchange of India (NSEL), an electronic trading platform where producers and traders could buy and sell agriculture and industrial commodities. NSEL had permitted bidding greater than the underlying assets and for longer durations than its mandated T+10=11 days duration. Therefore, a payment crisis at NSEL. Dues went unpaid to the tune of Rs. 5,600 crore.
The NSEL was being regulated by APMC(Agricultural Produce Market Committee) because it was a spot exchange not a futures exchange. But, it was acting as a futures exchange in violation of the rules without proper margin and settlement systems in place.
Therefore, after this crisis FMC is brought under finance ministry from Consumer affairs. This follows the logic that – regulations for commodities and stocks are similar since both are securities and involve trading of underlying assets.
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