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What is National Spot Exchange (NSEL)?

What is National Spot Exchange (NSEL)?
National Spot Exchange Ltd. (NSEL) not to be confused with the National Stock Exchange (NSE) is a platform facilitating spot trading in commodities. The national-level, electronic and transparent institution is a joint venture of Financial Technologies India Limited (FTIL) and National Agricultural Co-operative Marketing Federation of India Limited (NAFED). This electronic spot exchange is similar to other commodity exchanges in India, including National Commodity and Derivatives Exchange (NCDEX) and Multi-Commodity Exchange (MCX).

The structured set-up came into existence to overhaul the functioning of the commodities market in India. The platform works towards eliminating bottlenecks in the system by lowering down the cost of intermediation and thereby increasing marketing efficiency. Further, the set-up with its advanced technology landscape enables risk and hassle-free trading in several commodities.

When did NSEL started 'Live' Trading?

The electronic spot exchange initiated 'Live' trading for the first time on October 15, 2008. At first, the platform initiated trading in imported silver and gold bars for Ahmedabad delivery and pre-certified cotton bales for Mumbai delivery. Currently, the institution is functional in as many as sixteen Indian states and offers delivery-based spot trading in 52 commodities.

Who is the regulatory authority governing the functioning of NSEL?

NSEL like other commodity exchanges in India is accountable of its functioning to Forward Markets Commission (FMC) as per the Gazette Notification of the Ministry. Consequently, the institution on a regular basis provides information, returns and reports concerning trade to the authority as and when required.

How does NSEL functions?

National Spot Exchange offers custom-made solutions for procurement, storage, warehouse receipt financing and marketing of commodities to exporters, farmers, importers, processors and traders.

Which commodities are available for delivery-based spot trading on NSEL?

NSEL offers trading in each of the non-perishable commodities through its trading platform. Also, NSEL via its novel investment product e-SERIES facilitates trading in commodities in relatively smaller denominations. Within the product category, the institution has rolled-out e-gold, e-silver, e-platinum, e-copper, e-lead, e-nickel and e-zinc.


Why is NSEL in news currently?

NSEL is pretty much in news as the institution suspended trading in one-day forward contracts post the directive issued by the Ministry of Consumer Affairs on the last working day of July. The suspension occurred in the wake of the government's discovery of the bourses not complying with norms for carrying out trading activities on NSEL.

Soon after the suspension, the stakeholders in NSEL, FTIL and MCEIL dismissed any negative impact on their financials and businesses. According to The Hindustan Times report, Jignesh Shah, Chairman of FTIL stated that "We are confident that NSEL will resolve the situation within the contours of its bye-laws and rules". Further, NSEL to this effect acclaimed that the stocks held by the spot exchange are sufficient enough to cover total exposure of the exchange.

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