NSEL’s Scam – A Spotlight on Regulation of Electronic Spot Exchanges



Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

Abstract

The National Spot Exchange Limited (NSEL) scam turned the spotlight on to the many loopholes in the regulations governing Electronic Spot Exchanges (ESEs). The scandal involved a few individuals exploiting investors in the name of running an ESE. The case brings to light how the noble motive of introducing an effective price discovery mechanism in the agricultural commodities market went in vain.

It also enables a discussion on the reasons behind the scam, the role of brokers and promoters, and corporate governance issues at NSEL. Also, the case gave a scope to discuss about the role and responsibilities of the regulatory bodies and the government in preventing such scams.

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Issues

The case is structured to achieve the following teaching objectives:

  • Investigate how the NSEL scam took place.
  • Analyze the regulatory loopholes in commodity spot markets.
  • Reveal the governance structures of NSEL and its parent organization.
  • Debate ways to prevent such scams in the future.

Contents
Introduction
Background
Origin Of Irregularities
Towards A Disaster
Controversial Trades
Mismanagement Of Funds And Operations
Envisioning A Stable Mechanism
Exhibit

Keywords

National Spot Exchange Limited (NSEL), Financial Technologies India Limited (FTIL), Electronic Spot Exchange, Commodity Markets, Agriculture Markets

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