Why Trading Client Should Join

Hand With NSEL?

Overview Of NSEL Crisis

• The Bombay High Court has set up a specialCommittee to dispose of these assets and repaymonies owed.

• A retired Judge Hon VC Daga leads thisCommittee and it is making speedy progress.

• The National Spot Exchange Ltd (NSEL) Crisis came to lightmore than a year ago, when the present Defaulters of the Exchangefailed to honour their pay-in obligations.

• Trading Members who traded on behalf of their clients could notreceive their dues.

Action Taken

Investigating agencies have also established the money trail to 22 defaultingmembers of NSEL & it is imperative that they honour their pay-in obligationstowards NSEL.

• While 8 defaulters account for Rs 4823 crore of the pay-in, constituting 86% of theoutstanding.

• 11 defaulters have admitted to liabilities worth Rs 2095 crore before various courts.

• ED has seized assets worth Rs 700 crore belonging to the defaulter.

• Defaulter’s assets worth around Rs 5000 crores has been attached by EOW under theMPID act, 1999.

Broker’s Role

• Trading clients traded on NSEL exchange platform through their brokersunder a client–broker agreement.

• The first point of contact for trading clients are their respective brokers.

• Brokers have signed agreement with NSEL, as per which they are bound byNSEL’s bye-laws.

Misguidance by Brokers

• As per media reports, Economic Offence Wings (EOW) remand notes,the trading clients are claiming that their respective brokers havemisrepresented, miss-sold, used their name & misused the CLIENT-BROKER Agreement.

• The trading clients may initiate civil & criminal proceedings against thebrokers but this will take a long time & defocus the recovery effort fromthe defaulters.

FTIL Proposal• The proposal by Financial Technologies India Ltd (FTIL) towards

resolution of the crisis warrants that all parties like brokers, tradingclient, government & others participate with a resolution orientedmindset.

• As per the proposal 94% of the trading clients can receive 50% to 100%of their claims, approximately with 3-4 weeks of after all legal formalitiesbeing completed.

• The balance 6% trading clients can receive their claims approximatelywithin 3-4 months from amounts recovered from defaulters.

Source : Media Report & Image for Representation Purpose only