Equity mkts insulated from issues in other segments: Sebi

In the wake of payment crisis at spot commodity bourse NSEL, Sebi chairman U K Sinha today said equity markets are insulated from such issues as the market intermediaries operate in separate segments.

Stating that equity brokers and commodity brokers are two separate entities, Sinha said: "When the government and the regulators permitted brokers to also trade in the commodities market, it was made clear that they have to form a separate legal entity, they have to form a separate company. "So, that insulation has happened right from the day one. There is one limited private company or public limited company which is doing one business and there is one which is doing another business. They may be part of the same group, but there is no doubt that they are two separate entities," Sinha said at an event here. National Spot Exchange Ltd (NSEL) was engulfed in a crisis when it stopped trading on all contracts on July 31 following government directives. It raised concerns about the possible default of Rs 5,500 crore to investors. On the ongoing NSEL issue, Sinha said there is no worry about their liquidity position. The Sebi chairman further said, the job of Sebi is to ensure that the people who are trading on the securities market are well capitalised, their margins are in place and they are not allowed to do any trading beyond their means. "We are on top of this and I have been assuring people that we have looked into the system again and again and there is no need for any worry for anybody," he added. Meanwhile, crisis-ridden NSEL defaulted for the fourth consecutive week as it could pay only Rs 7.77 crore today to investors out of scheduled Rs 174.72 crore. It had defaulted in payments on three previous occasions as well. With today's pay-out, NSEL has been able to settle only Rs 128 crore out of Rs 5,500 crore outstanding to the 13,000 investors. The exchange had availed a bridge loan of Rs 177.23 crore from its promoter Financial Technologies. Watch Sebi chief UK Sinha speaking on the NSEL crisis.