The suspension of trading in e-series contracts in precious and base metals by crisis-hit National Spot Exchange (NSEL) has sparked a scramble among investors to convert demat certificates into physical delivery. According to sources, the average daily turnover in the e-series segment was around Rs 100-200 crore.“Clients are unable to sell their demat certificate after NSEL stopped its trading, the only option is to convert it into delivery,” a Mumbai-based broker said. NSEL said it was halting its e-trading services as an abundant precaution. The Forward Market Commission , which is trying to settle the payment crisis at the exchange, has expressed its apprehensions on the e-series contracts. The exchange was offering e-series contracts in gold , silver, platinum, copper and nickel, among other metals, on its platform as investment products, which were held in demat form.The Central Depository Services (CDSL) and National Securities Depository Services (NSDL) acted as the depository for e-series contracts of NSEL and issued depository certificates. The clearing and settlement, and pay-in and pay-out mechanism on these contracts were based on T+2 cycle.Executives at NSEL told ET that the exchange is likely to offer an exit opportunity to e-series investors by allowing them to take delivery or square off their holdings at the market price of the day. “The capital markets regulator Securities Exchange Board of India ( Sebi ) has asked both CDSL and NDSL to discontinue providing any kind of depository services to commodity markets, as there could be an issue of possible regulatory overlap,” said an NSEL executive. “A formal communication would also be issued to depositories in this regard.”The regulator is also trying to ascertain the amount of bullion and other metals held in demat form by both the depositories for investors on the NSEL platform. Sebi regulates CDSL and NSDL’s business related to depository services.According to a broker, investors could buy as little as 1 gm of gold or 100 gm of silver on the NSEL platform by opening demat accounts with the NSDL or CDSL, and they had to give an intimation to the depository for converting it into physical stock. After value-added tax and other applicable levies were paid, the depository issued a receipt and the investor could collect his delivery from various vaults across the country.A key feature of the e-series was that there was no storage or holding cost for the stock and transaction cost on the exchange was Rs 1,000 for every Rs 1-crore turnover for delivery-based transactions. For intra-day transactions, the fee was Rs 500 per Rs 1-crore turnover.Commodity market players say several brokers secured delivery of bullion metals on NSEL and used it for short selling on the commodity futures exchange.There were over 175 empanelled depository participants (DPs) for NSEL, including Globe Capital, Religare Securities, Karvy Stock Broking, Aditya Birla Stock Broking and India Infoline. The investments also attracted wealth tax and capital gains tax. Short-term capital gains were applicable at the slab rate while long-term capital gains, if the investment was held for over 36 months, were taxed at 20%.