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Shares in Financial Technologies slumps 50% on uncertainties

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Shares in Financial Technologies slumps 50% on uncertainties
Shares of Financial Technologies dropped 50% in trade after the National Spot Exchange, a commodities exchange in which it owns a substantial stake, announced suspension of trading in its one-day forward contracts till further notice. Shares of Financial Technologies were quoted at Rs 250.25 on the BSE, almost half the price closing of the previous day.
 

"National Spot Exchange Limited (NSEL) has suspended trading of contracts, other than e-Series contracts till further notice. It has also decided to merge the delivery and settlement of all pending contracts and deferred the same for a period of 15 days. Consequently, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days. Exchange shall announce a revised settlement calendar and contracts due for settlement after this 15 days period," the company said in a release.

Pursuant to the directions issued by the Department of Consumer Affairs, Government of India vide letter dated July 12, 2013, the Exchange had given an undertaking to the Government and simultaneously introduced T+10 with Trade to Trade settlement. This was done with a view to ensure orderly participation without creating any negative sentiments in the market.

"Such structural change has disrupted the market equilibrium as volumes on the Exchange have gone down significantly. It created conflicting views in the minds of large number of members that there are certain regulatory issues pertaining to the contracts running on the Exchange in view of direction dated July 12, 2013, which has been widely reported in media."

"This abrupt action has created uncertainty and doubt about continuity of trading on the Exchange and hence most of the participants started withdrawing from the market. While the Exchange has run successfully without any disruption since last five years, such structural change has created market -dis-equilibrium, leading to this scenario," the firm said in a release.

GoodReturns.in

Story first published: Thursday, August 1, 2013, 11:03 [IST]
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