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The Bombay High Court on Friday said the Forward Markets Commission (FMC) was responsible for regulating forward contracts on national online spot commodity trading platforms, including the beleaguered National Spot Exchange Ltd (NSEL). FMC hasn't clarified its stand on the matter yet. The court has ordered FMC to do so through an affidavit on Monday. Hearing a case jointly filed by Tarun Amarchand Jain HUF (Hindu undivided family) and Ashish Seth HUF, a bench of judges S J Wajifdar and K R Shriram said, “It is clear FMC had the power to regulate forward contracts, including the ones of NSEL.”
Under section 27 of the Forward Contract (Regulation) Act, the Ministry of Consumer Affairs (MCA) had granted NSEL exemption to introduce one-day forward contracts without categorically entrusting regulatory power with the FMC. Another section of the same Act said an entity registered by the MCA and recognised by FMC should be regulated by the latter.
The Bombay High Court has directed FMC to clear the redemption requests of NSEL's e-series investors. It said redemption requests other than those from the Indian Bullion Markets Association (IBMA) should be accepted by NSEL, adding any settlement shouldn’t be done without FMC's prior approval.
