Shares of Financial Technologies slumped as much as 66.4 per cent after the National Spot Exchange Ltd, a commodities exchange in which it owns a substantial stake, suspended trading in its one-day forward contracts till further notice. As of 11:43 am, Financial Technologies stock was trading down nearly 59 per cent. As many as 5.2 million shares had changed hands by 10:12 am – over 20 times the stocks’ average daily volume.
Shares in Multi Commodity Exchange of India, another FT-promoted company, were down 20 per cent at Rs 510.55 at 11:58 am.
The government had earlier asked the spot exchange not to launch new contracts, creating uncertainty among traders, the NSEL said.
“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,” NSEL said in a statement.
The exchange also decided to merge the delivery and settlement of all pending contracts and deferred it for a period of 15 days.
The exchange said its “e-series” contracts, through which investors can buy and sell commodities in demat form, will continue to be traded and settled.
NSEL has physical stock worth Rs 62 billion, compared to total outstanding contracts of Rs 55 billion, the chief executive of the commodities exchange, Anjani Sinha, told CNBC-TV18.
“My stock is more than sufficient to cover the overall exposure. There is nothing to worry for participants members or clients,” Sinha told CNBC-TV18, adding the exchange has Rs 8 billion in a guarantee fund.
Sinha added NSEL will announce the pay-in and pay-out by Friday at the latest.
The spot exchange clocked an annual turnover of Rs 6 billion in the year to March 2013, and had 67 running contracts on the exchange, with sugar and rice contributing to most of its volumes.