NSEL crisis: Defaulters barred from trading in stock markets
While action has been initiated against nine defaulters so far, more entities would face similar fate if they fail to pay the money owed by them to the National Spot Exchange Ltd (NSEL) investors, officials at stock exchanges said.
The decision to this effect has been taken by various stock exchanges in consultations with the capital markets regulator Sebi (Securities and Exchange Board of India).
Sebi is already probing various aspects of NSEL crisis, including the role of some brokers for possible mis-selling of forward contracts at the spot exchange in violation of regulations related to portfolio management services and prevention of fraudulent and unfair trade practices.
It is also suspected that some brokers might have diverted clients' funds to take positions on NSEL, while their roles are also being probed for possible collusion with persons with insider information for trading in the shares of two listed group entities --- Financial Technologies (FTIL) and Multi Commodity Exchange (MCX).
NSEL was set up to provide an electronic platform to farmers and others for spot market trading in agriculture and other commodities, but it later emerged that some short- duration forward contracts were also being traded there.
As a payment crisis involving an amount of over Rs 5,500 crore emerged