Although not a formal member of the commodity futures market, the payment default at National Spot Exchange Ltd (NSEL) shook the market to its core, resulting into a series of regulatory steps to revive investor confidence and credibility during 2014 and it is now hoping for a fresh start in the new year.

As a result, the total turnover appear to be falling to around Rs 65 lakh crore, almost half of Rs 123 lakh crore clocked in 2013, although the industry players and regulator FMC are hopeful that "the worst is over".

"Bright days are ahead for the commodity market as the confidence and credibility, which was shaken up due to the NSEL scam, has fully been restored now," Forward Markets Commission (FMC) Chairman Ramesh Abhishek said.

In 2014, the regulations were tightened for promoter and shareholders of the exchanges, warehouse facilities were strengthened, ban was lifted on tur, urad and rice trade, while exchanges were allowed to launch forward trading to bring effective price discovery and efficiency in physical markets.

Going ahead, the FMC chief said that the focus would be on increasing depth of the market and quality trade volumes, and is in talks with RBI to allow more market participants like FIIs and banks in the commodity market.

On the wish-list for next year, the exchanges -- MCX, NCDEX, NMCE and ACE -- said that they want the government to scrap Commodities Transaction Tax (CTT) and allow more products and market players.

On major milestones achieved in 2014, the FMC said that "the biggest achievement of the year was that we have initiated measures to ensure investors get back their money from the National Spot Exchange Ltd (NSEL), promoted by FTIL."

A strong message was sent to the industry by ensuring Financial Technologies India (FTIL) implement the FMC's December 2013 order that declared the company unfit to run any exchanges, it said. FTIL exited completely from MCX, MCX-SX and other exchanges in India and abroad.

FMC chief said: "All uncertainty and regulatory issues that were there have all been resolved. Post NSEL crisis, there is better regulation, more depth and participation."

Ace Derivatives and Commodity Exchange CEO Dilip Bhatia said, "So many regulatory changes have happened post NSEL crisis that the market is now on a sound footing. Now, we must bring structural reforms."

The Rs 5,600 payment default at NSEL, which surfaced in August 2013, is one of the biggest scam in the history of financial markets in India. The scam exposed lack of regulation in the spot commodity exchanges.

With poor progress made by NSEL in recovery of dues from 22 defaulters, the FMC recommended to the government to merge NSEL with FTIL and takeover management.

NSEL has been able to recover only Rs 360 crore so far of the total Rs 5,600 crore dues, as per the NSEL data.

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