FMC asks bourses to register warehouses with WDRA

Directive issued to six national commodity bourses as FMC finds some exchanges are not ensuring the quality & quantity of commodities

In the wake of NSEL payment crisis, sectoral regulator FMC has directed national commodity exchanges to register their warehouses with WDRA by the end of this year to ensure quality as well as quantity of the produce lying with them.

A directive has been issued to six national commodity bourses - MCX, NCDEX, NMCE, ICEX, ACE and UCX - as the Forward Markets Commission (FMC) found that some exchanges were not ensuring the quality and quantity of commodities.

"Of late, it has been observed that some of the exchanges have issued circulars in which, conscious efforts have been made to evade their prime responsibility of ensuring quality and quantity of commodities as per the prescribed contract specification, and to pass on the entire onus to the warehouse service providers, which is not correct," FMC said.

FMC is overseeing the payment of Rs 5,600 crore dues by the National Spot Exchange Ltd (NSEL) to investors after the exchange shut its business due to violation of some rules, like allowing trade without having stocks.

WDRA regulates warehouses and the receipts therein for orderly development of the business.

For better regulation of warehouses, FMC has asked all national commodities bourses to register their warehouses with the Warehousing Development & Regulatory Authority and obtain the accreditation certification before December 31.

It has also asked the exchanges to accredit only those new warehouses at their end which have already been registered and accredited by WDRA.

The regulator has also sought comments from exchanges for prescribing norms for eligibility of warehouse service providers by September 10.