What happened on the NSEL (National Spot Exchange Ltd) recently is system failure or is it a scam. Lets try to analyse the case as you know imagesNational Spot Exchange suspended trading in most of its contracts and deferred payouts to its members, triggering fears of a default.At the onset it looks like the liquidity issue.

So what really has happened NSEL, a spot commodity exchange promoted by Financial Technologies, introduced products with characteristics that purportedly violated the norms governing such exchanges.

NSEL launched contracts with more than 11 days tenure, while spot exchanges are not allowed to offer such contracts. The exchange also reportedly allowed members to do short selling, which is not permitted on spot exchanges, where delivery of the commodity traded is mandatory. Continue reading