The Financial Technologies group has always managed to get generic words as company names, with Registrars violating their own guidelines. Use of words like ‘National’ for National Spot Exchange are illegal too
The National Spot Exchange Limited (NSEL) scam is unusual in many ways. First, people were lured into participating in risky ready-forward or financing transactions because of the illusion of adequate regulation, supervision, trade guarantees and all the safeguards claimed by modern bourses. Each one has turned out to be a lie. As we’ve said elsewhere, the ministry of consumer affairs (MCon), which has no regulatory framework to supervise any exchange, allowed NSEL to be set up by a simple, bureaucratic exemption. MCon’s website has a page on the rules governing the use of emblems and names, as specified by statute. This clearly says that nobody but a government entity can use words like ‘National’ and ‘Indian’. Anyone who has tried to register a company knows that these words, as well as a combination of generic words (like those on the website: Institute of Mass Communication), are rejected outright.
So how is it that Jignesh Shah’s Financial Technology group as well as all the commodity futures bourses under the ministry get these names in violation of the statutes? Did none of the politicians and bureaucrats on the boards of these entities notice the names or the effort that would be required to have them cleared? The name National Spot Exchange Limited clearly creates the impression that it is a public sector entity, like the National Stock Exchange (NSE) was, when it was started. This is no longer true today. The FT-MCX group was allowed to use the word ‘national’ even though it is entirely a private sector entity.
That is not all. How was it again granted the use of the word ‘national’ for the National Bulk Handling Corporation Limited which is a private entity? The name makes it appear similar to the government-owned Central Warehousing Corporation. Wasn’t this a deliberate attempt to mislead people in the commodity markets? The FT group also has the Indian Energy Exchange—another private sector bourse that has been allowed the use of a name that clearly violates the names and emblems statute.
The statute to prevent the misuse of names and emblems was enacted far back, in 1950, specifically to stop such attempts at confusion. It is unclear who monitors the use and misuse of these names, but the act of granting registration to these names is clearly done by various registrars of companies (RoCs), under the ministry of corporate affairs. Will they be asked to pay a price?
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam