This Article is From Aug 14, 2013

Financial Tech down 35%, brokers allege NSEL is 'buying time'

Financial Tech down 35%, brokers allege NSEL is 'buying time'

Shares in Jignesh Shah promoted Financial Technologies plunged as much as 35 per cent on Wednesday after a number of brokers and investors raised doubts over National Spot Exchange Limited's ability to quickly pay them after suspension of trade.

National Spot Exchange Limited, a subsidiary of Financial Technologies, suspended trading in forward contracts on July 31 following government directive.

The suspension of trade and the consequent delay in payouts of over Rs 5,500 crore to various entities had led to sharp selloff in shares of group entities such as Financial Technologies and MCX.

Motilal Oswal, chairman and managing director of MOSL told NDTV that NSEL's handling of matters is creating confusion in the minds of brokers and investors. (Watch)

"Statements made by NSEL are contradictory. There is no transparency in sharing information," he said.

Mr Oswal also alleged that NSEL may not have adequate quality and quantity of goods in its warehouses as stated.

"We believe they are buying time, which is making us jittery," he added.

Motilal Oswal has an exposure of Rs 250 crore to NSEL.

Last week, NSEL had published a list of warehouses containing physical commodities and value of these commodities. As of July 31, NSEL held physical commodities worth Rs 6,000 crore in its various warehouses against total outstanding amount of Rs 5,570 crore, the company said.  

Mr Shah took questions from the media last week, but his statements led to more questions about the functioning of the exchange. Mr Shah said the exchange will announce the final settlement schedule for all outstanding contracts on August 14.

The NSEL management, which was due to address a press conference later in the day, cancelled the event without citing reasons.

Financial Technologies fell 13.2 per cent, while MCX ended 5 per cent lower. (Traders)