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National Spot Exchange Ltd (NSEL) today said it has suspended trading in all contracts except "e-series" until further notice following a government order.
Last month, the Consumer Affairs Ministry had asked the NSEL not to launch any new contracts till further instructions and also sought undertaking from the NSEL in this regard.
In a filing to the BSE, NSEL's promoter Financial Technologies India Ltd (FTIL) informed that its subsidiary "NSEL has suspend trading in all contracts, except e-series contracts, until further notice."
It has also decided to merge the delivery and settlement of all pending contracts and deferred the same for a period of 15 days.
Consequently, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days, it said.
The exchange clarified that the trading, settlement as well as physical delivery under the "e-series" contracts in commodities like gold and silver would continue as usual.
In a separate circular, the NSEL said it has decided to suspend trading in contracts, except e-series, because of poor volumes on the exchange following the government direction.
It has given an undertaking to the government that it would ensure orderly performance of markets and reduce settlemen period of contract to below 11 days, adhering to norms.
"Such structural change has disrupted the market equilibrium as volumes on the exchange have gone down significantly. It created conflicting views in the minds of large number of members that there are certain regulatory issues pertaining to the contracts running on the exchange in view of the (government) direction dated July 12, 2013," FTIL said in the filing.
"This abrupt action has created uncertainty and doubt about continuity of trading on the exchange and hence most of the participants started withdrawing from the market," it added.
A revised settlement calendar will be announced for contracts due for settlement after the 15 day period.
It also clarified that other initiatives of the exchange such as e-auction, e-procurement, MSP operations on behalf of government agencies like NAFED would also continue uninterrupted.
The daily turnover on the exchange which was over Rs 1,000 crore till June, has now come down to around 350 crore.
