Exchanges can register warehouses with WDRA till March '14

The Forward Markets Commission (FMC), the commodities and derivatives market regulator, has extended mandatory registration of all warehouses with the Warehouse Development and Regulatory Authority (WDRA) by three months.

An FMC circular said the commission had decided to extend the time frame for registration of all existing accredited warehouses of the exchanges with WDRA till March 31 next year.

The extension assumes significance mainly considering the difficulties faced by exchanges in handling physical deliveries due to non-availability of WDRA-accredited and registered warehouses at various locations. Earlier, the regulator had ordered exchanges to register all accredited warehouses by them with WDRA as early as possible, but not later than December 31 this year.

Also, the exchanges were ordered to accredit only those new warehouses that are registered and accredited by the WDRA.

The regulator also allowed that the exchange can accredit new warehouses which have applied or will apply for registration to WDRA by December 31.

"It has been brought to the notice of the commission that exchanges are experiencing difficulties in handling physical deliveries due to non-availability of WDRA-accredited and registered warehouses at certain locations as the process of registration with WDRA will take some time because of various procedural and logistics issues. The inadequate number of warehouses at certain delivery centres has adversely affected the efficacy of price discovery process and trading in certain commodities. These issues were discussed in the deliberations with WDRA," said the circular.

Responding to the decision, an exchange official said the extension in mandatory registration of the accreditation would help them bring more transparency in the commodity futures ecosystem.