In the year 2004, NSEL was conceptualized from the PM’s vision to create national “Single Market”. NSEL business was bona-fide and approved by the Government. On 8th July 2004, Palaniappan Chidambaram, Finance Minister in his speech asserted importance of Spot Market. According to Economic Survey done in 2003-2006, 3 consecutive years of survey highlighted PM’s vision on Spot Market.
On May 2005, National Spot Exchange Limited (NSEL) was incorporated by Multi Commodity Exchange of India Ltd. (MCX). FMC seek’s concepts paper from MCX on creation of National Spot Market on 31st May, 2006. Further taking into consideration on 18th July, 2006 MCX submitted a concept paper for setting up of Spot Market. On January 2007, the 11th Planning Commission recommended for setting up Spot Exchange.
On 5th June 2007, NSEL was approved as a spot exchange by Department of Consumer Affairs (DCA). National spot exchange limited (NSEL), commenced live trading on October 15, 2008, and was the first commodity spot exchange of the country. NSEL was the first electronic spot market to obtain license under APMC Act in Maharashtra, Karnataka, Gujarat, Orissa, and Rajasthan and had carried out trades in all states by enabling farmers to sell their produce to bulk consumers. NSEL had operations in 16 States in India along with delivery-based spot trading in 52 commodities. NSEL is a company promoted by Financial Technologies India Ltd and NAFED.
Impact of NSEL Intervention:
- On 26th August 2010, FMC recommended FCI to use Spot Exchange platforms like NSEL, as they provide better service and facilities compared to other models.
- On 5th August 2011, FMC appointed as designated agency to regulate Spot Exchanges.
- FMC wrote to MCA On 5th August 2011, urging RBI to exempt Spot Exchanges from the purview of Payment and Settlement System Act.