It is surprising to note that Forward Markets Commission (FMC) never let NSEL management handle recovery and never partnered NSEL’s recovery effort. In fact, the FMC kept taking decisions to destabilize recovery and keep defaulters away from being the focal point.
If the Department of Consumer Affairs (DCA) had accepted NSEL’s suggestion of orderly closure of market in July 2013, the episode would not have happened. Globally, post-global market crisis, it called for creation of stability and isolation of risk whereas despite Financial Stability and Development Council(FSDC) being in place, the FMC through its various actions in fact has enhanced and accentuated the risk for the FTIL due to its hurried decision on declaring Financial Technologies as not Fit and Proper. Overtime, enough evidence was there which clearly proved this point but by then NSEL had been disadvantaged.
Dealing with these kinds of complex issues requires the support of the government and the FMC should have sought this support. Instead, the FMC chose to dump NSEL and make it extinct as an Exchange and damage the prospects of the Financial Technologies Group for a reason not very noble.
Though the Government in 2011 designated the FMC to provide oversight, safeguarding investor interest and collection of periodic information from the national spot exchanges, the latter did not initiate enough measures to conduct these vital functions that were required for sustained growth of spot exchanges.
Though FMC in their communication dated August 12, 2013 to DCA proposed actions under their power, FMC did not even appoint forensic auditors on defaulting entities, and also did not take effective and prompt steps for ceiling of warehouses. Instead it went ahead only with the preconceived objective of framing Financial Technologies Group.