The Forward Markets Commission has presented three gazette notifications that specifically rule out exchanges like NSEL from its jurisdiction. These are damning; the government has singled out these exchanges to not be regulated under the FMC act, and one of them (NSEL) has gone on to cripple investors by delaying settlement by 15 days.
The notification frees NSEL from 2007, NCDEX from 2008 and APMC from 2010, from any FMC regulation for forward contracts of one day duration.
While this is a good attempt by FMC to deflect any criticism for their lying low, the problem has not been because of NSEL’s one-day contracts. The problem was because of their “T+25” contracts like this one for raw wool. (Read more)
The conditions laid out by the government clearly state that no short selling is to happen (meaning, selling without owning stock hoping to buy it back later at a lower price), and that all positions will end in delivery. But the fact is, these only apply to one-day forward contracts – nothing prevents regulation of contracts that are settled 25 days later, no matter what NSEL decided to call it.