iFin 1T(4TtGO\ [ Lrri.itlNT Or DDI\

-qTq-i qgri erT+rT

I

, ro[t,-,scoat.raLe"!at'

E nL?il

I or \\ ArLD- ]l crrl.iI l:' S'lHl't3=1,-r o=T='.,{..r =rri, *'"#r-.,.Sruiucor.rn[' rro.,\1,\.,rsr R) or cor'u rrrlj$| p<.,.1

olpAnr;t':r or cossr rllR AFil*lsl qit< fl{t' n=

--q- -ffi is?EEn 'o*t '"'' "*e.::+:::i:-"1:x11']-+., rfirz I J r I-i- t"". ffi"t;L"* ,].-;.",rir - ,oo oo,(\1: " O\f roo,i\

\ Y Dxred 1o'' Al t il' loll\ -/ Uxleo ru n

r.No.7/jd2olo-illil l t;7

CONIIDT\TlAL

ToSlui Brii MohaoDirectol (IT)Minisir) ol CoNumer AilaLrs'

iooa una P,ULi' Oitu'Uution'n,"r ^i Consurner Attarrs'

iril,tri sl''a' an. l'{'w D'Lhi t t0 ooL

- "_-' Ne1rr ) rrn'1er section 27 of thc

sub: FrLrxrlriou io Na,,"q tn:l.t,l-':;::",;i?iili.e"r,io",",,n.,,',- S o. No'

I "A\ ird Contracts {t(cgurrt'uur n!" ' ' '- \

riifr J"*a s'n r""' 2007-Res " l

Sir,

! ,. ,, ,,1 " l..i r-|!0

' '' -!ardM"rkeLsCon'ml)s'or lrIvL! r )rL "

' -'r' dne(ted lo stat' tnet rur\

:pon'ng

.,' "r,*,"i*"-o**";.'"'l1,."j',::: ::'*1';:flT:fi:r[:::[];;'''l :. ,':'agencyoIlne\r9v ruu"il' -- "--,

to f",.po*"a on WeekLy. Forrnightt/ and Quartqrly

i ., r;,'., t:ryt: fo' *i" seot Erx,c:l1l::s --,,.^" r;ia,,.e-D,;and:,caLled:.upoi1 Ihe lradiai;nq

. lormars lor th'spor t-''"";;t;:

;;;erurt-lr and crLled ,por ''e rr"dieg and

': ' t4is .9 ti'" t :".^::::t^:lf' :,.a .;'n,;c,i ,,ua.ar on N'ationrr:s or crchane"q 'iz'

,,,, *rlr;,:H::::gi****:;ffi::m:Iili;

. COi.iFINENTIAI,

2. TIii' Govemmeoi Yi,le Gazrii. l:orilLc:1iior ctrted 5rh Junr 2007 er' pl?d al!

fonnard cortra.ts of or. rt-li .lur3tion loi the s1l' and purchase ol cotl\ !Cili'r tra'1:d on

NSEL fLoRr lhe operalion of th3 Provisi')rj of !CP' Act subject to th' fcl[o!r:o3' atnong

*_.r.onl.,iors , na rre ly.:

(i). No short sale by Members ofthe Exchange shail be allorved

(ii). 4i! oufstandilg positiofls of the ttade,at the e;d oi ihe day sl1all result in

I t;\ (r r.

l. Afier analyzing the trading dala received from Nitional Spol Exchangb Limited

(]'{SEL), the Commission sought some cLarifications lrom NSEL vide its letrer No'

7/lA/2010-MKT{ dated 2lst February, 2012 (Annexure-Ill) NSEL snbmitted its replv

vide lelter No. NSEL/FMC l21ll-l1t]6l dated 29t! February, 2012 (Annexure-IV)'

Examinaticn of Lhe trading data aod rhe subsequeni clarifications received from NSEL

ievealed ihat NSEL is not tulfi1ling lhe above n1enlioned conditions 2(L) anJ 2(ii)

sripulated under Noiification S..Q- No. 906G) dated 5:6-2007' This is elaborated.as

follo.\

Condition zfi): No

allorved

short sale by Ore members of the n{chaDge strall be

'" -ed iorFro.L lf d.l" re':'vcd hon' the F\chr: l< 't \ras found tfct " o"Tr''t ! t-L

lrade on NSEL ha\e ,er'letnenl period elce(ding ll days' A' pr' l\e d('n' :on '( |

ract is a cotlt(aci for cleli!'erj of goods and *hiclliL. r,r? ECRA, lr)--) 3lor\\drdLool ,", ,'\e,'o[Ilnol ,r l(ady deli!e ) 'onrLact' A readr dil \crtronlracl(rnp:oqu( ULU!i

goods and payment of plice therefor' either irnmediateiy or \irhin such piriod nol

]"*"ai.g "1",". days " Thr;refore' all the contlacts lIaded on NSEL ,vhich Frovides

Settlernerrtsclreduleforaperiodex.eedinglldaysarefonv|rJcontrlctsEvenii

such iontracts result it1 delivery' they are not outside ihe pun'i'w ofFCR Aci as they

of bu'siness in which is subjec! io the pro\ isionsale NTSD contra'ts, the conllol

under section 14A of the FCR Act' Inits letlerNo NSEL'TIVIC i2011-12/1160 dsled

29tl February, 2012, NSEL has agreed that all th€ conirscts tradcd ou the

I [*"huog" ptatfotot ior' ri'hict' settlemeni- Period ercecd 11 days are tr"TSD

coDtrlcts. NSEL claims that ihe Govemmellt has granted exemption to NSEL ift

' -loL ' (r^ding in rhe'e ! o:1'"'r' on NSE| ae1:'nrespe' ( of these con aci' ard tner

' - FCR Act However' this claim ofNSEL can"rDi be\'olarion of the Provisiotu o[ lhe _ _

!.oNIIllJfIli--

Bte lL. / No. I0.5 and lO l5ofllr'NSEL(Ar'ucrurcV)are nrl irl consoi'ar'''r witir

the conditlons stipuialed Lry llle Go!'eixili'nt lilat no slicri sxl: bl r11:mr'rs ot tll:

Excirange shall be allo\\"1'

. Condition z(ii) : All ouistntrdirg pcsitions oi thc irade t't tlre end of iLc div

shall result iD delL\'en

u'.P,vrr.ivrE!!_-_-

ue Go..*ment t.s not gIa' e'l any ex'mP'ion !o NSEL :n'esP" I oi.." I I l: j--.. ^. \i-ren :

16

C ONTII)]]NI'I .\L

I ln \.ie!r of the aoove obsen,ations, it is clea. that NSEL )!as ror lollolvrd rlr:

conditions stitulaled unC.. notificatio No. S.O.906(E) dateC itI Jlure,2ClT !id: r lr ,

oo. d3y duration fonrra::d contracis ,,vere er.tinf)ied on ihe Nari.I1x! Spct E:(ch..ng3 L!1.

under Section 27 of the Forward Contracts (Regulation) Acl, I9j2 (FCF-A). Minisrrr., litLr3iefore requssted to take necessary action at its end, regarding the above violations

Yours faithirlly,

Encl: As staled above. llrL.',---

CNuta Raj)Economic Advisor

o\',-;2

g6;;'X:'ggrlo* G-'nu' ' "