FMC proposes uniform criteria for warehouse service providers

Sets minimum networth criteria, makes insurance of stored goods mandatory, seeks public comment in three weeks

The commodity derivatives market regulator, Forward Markets Commission (FMC), has proposed uniform criteria for all warehouse service providers (WSPs), in a draft set of guidelines. It has invited feedback till September 15.

It has come to know that there is no uniformity in norms among nationwide multi commodity exchanges (NMCEs) for accreditation of WSPs. The Commission has been discussing this issue with the exchanges and other stake holders, so that warehouses conform to certain minimum uniform standards, FMC said in a circular.

FMC has suggested a credible WSP promoter or promoter group can get exchange accreditation only after completion of three years in this business. Plus, minimum net worth of Rs 5 crore for a  single commodity and Rs 10 crore for multiple commodities to be eligible. The WSP should also be adequately capitalised to carry in compliance with all the conditions as may be prescribed from time to time.

A WSP shall furnish a security deposit of two per cent for the value less than or equal to Rs 250 crore of goods stored. For storage between Rs 250 and Rs 500 crore, the deposit goes up to three per cent. And, five per cent for above Rs 500 crore.

A daily monitoring of the security deposits vis-à-vis the value of the commodity stored needs to be done. The exchange may ask for an additional security deposit, if considered necessary.

A WSP should adhere to good corporate governance norms, with independent auditing of financial statements and credible infrastructure. It shall at all times ensure full coverage of the value of goods stored at warehouses approved by the exchange under insurance for all perils relevant.