Shares of Financial Technologies tumbled on Thursday in the wake of National Spot Exchange (NSEL) suspending trading and postponing the settlement of all one-day forward contracts.
Financial Technologies is having a substantial stake in NSEL.
Financial Technologies was down by Rs. 349.80 or 64.59 per cent on the Bombay Stock Exchange (BSE) at Rs. 191.75. The stocks of MCX, where too Financial Technologies is having a stake, fell by 127.95 points or 19.99 per cent to close at Rs.512.05.
“Trading in all contracts, except e-series contracts, stands suspended until further notice,” NSEL stated in a notification.
“In view of the grave emergency that has emerged in the market and in order to safeguard interests of all participants and market in general, and pursuant to bye-laws and rules, the relevant authority is satisfied that continuation of trade in one-day forward contracts, other than e-series contracts, is not in the interests of market and that it is expedient in the general interests of the trade so to do,” it added.
It has also been decided to merge the delivery and settlement of all pending contracts with effect from Wednesday, and to defer it for a period of 15 days, and, consequently, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days, said NSEL adding, “a revised settlement calendar will be announced for contracts due for settlement after such 15 days period.”
It is clarified that the trading and settlement as well as physical delivery pertaining to e-series contracts such as e-gold and e-silver will continue as usual. NSEL also said that its other initiatives such as e-auction, e-procurement, and MSP operations on behalf of Government agencies (NAFED and SFAC) would also continue uninterrupted.
Jignesh Shah, Chairman & Managing Director of Financial Technologies, said that “ The action of NSEL does not entail any financial liability on FTIL and that the business at FTIL is as usual.”
In another note to the BSE, Multi-Commodity Exchange of India (MCX) MD and CEO Shreekant Javalgekar clarified that “there will not be any impact of NSEL’s circular on the operations and financials of MCX.”
India Infoline, on Thursday, said that India Infoline Group — India Infoline or any of its subsidiaries - did not have any proprietary positions. It further claimed that it had funded any client positions on National Spot Exchange Limited (NSEL). Accordingly, “we clarify our position so that nobody is misled by baseless rumours about IIFL’s exposure to NSEL.”
The Government had earlier asked the Exchange not to launch new contracts, creating uncertainty among traders.
The NSEL said that the Exchange had given an undertaking to the Government, and simultaneously, with a view to ensuring orderly performance of the markets, introduced T+10 contracts with Trade for Trade settlements. Despite this, “there is a loss of trading interest in the market due to underlying uncertainties, which has led to trade in-equilibrium.”