Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Commentary

NSEL Pledges Stock with ICICI, SEBI Tracks Brokers and MCX Ring-Fenced Away

Business Standard is doing some awesome research about NSEL.This is real journalism. Now, they find NSEL’s jeera warehouse with a notice saying the goods are pledged with ICICI Bank!

The crisis-ridden NSEL has two warehouses at Unjha for jeera. A visit to these warehouses at Shivganga Area, on the Unjha-Unava Highway, near Unjha revealed that the stock was already pledged to ICICI Bank Ltd.

NSEL Pledges Stock with ICICI, SEBI Tracks Brokers and MCX Ring-Fenced Away
(Business Standard)

And then, they note that SEBI is now tracking stock brokers and portfolio managers for getting HNIs to trade after promising those mega returns. (Read: The "100% Risk Free” investment)

Sebi has received complaints that these brokers were offering returns of up to 15 per cent to their clients, by asking them to place one-day buy orders for various commodities on NSEL platform, followed by immediate sell orders to be executed in next few days.

Besides, many brokers could also have been taking proprietary positions on NSEL with their own or clients’ money as a hedging instrument in the wake of dwindling returns in the capital markets, sources said.

The question to ask is: Did the brokers get out of their proprietary positions while leaving their clients holding the bag? If so, they face serious action if they can’t prove they tried to warn each and every such customer.

And FE says that MCX is being ring-fenced by the regulator, FMC, to ensure funds don’t go to NSEL.

FMC chairman Ramesh Abhishek told FE that MCX has been directed not to give any loans, advances or make any financial commitment to any corporate or non-corporate entity without FMC’s prior approval, excepting transactions in the normal course of business. “This financial ring-fencing has been done to instil confidence among investors,” Abhishek said.

Oh, we’re just getting started. There’s lots and lots and lots more to come.

  • NR says:

    Doesn’t that mean ICICI Bank has accepted what is already collateral as a collateral for a new loan? What were they thinking?

  • Geetha Mani says:

    It is a case of a tortoise regulator and a hare broker running a race. If SEBI was smart enough to foresee market developments and made rules to plug holes, private companies like NSEL wouldn’t have made their own rules to play by.
    Alas, the victim of this pathetic scene is clueless investors who are losing their capital due to the systemic effect. Let’s hope SEBI wakes up and learns to run faster!

  • Sanjeev B says:

    Latest news: ICICI Bank has signed a contract with a manufacturer to procure 20,000 ‘smart’ jaljeera vending machines. These will be installed beside all ICICI Bank ATMs.
    ATM users can also get a free glass of jaljeera if they key in their mobile number on the smart vending machine keypad, and then validate it with the 4-digit sms code they receive.

  • Niftytrader says:

    NSEL puts up stock and lender details….now upto FMC to verify…