NCDEX, CDSL planning July launch for commodity repositories

The move will pave way for trading and financing against electronic warehouse receipts

Repositories in the commodities business are set to start operations in July if everything goes to plan.

This is expected to give a boost to trading in electronic warehouse receipts and financing against commodities. The Warehouse Development and Regulatory Authority (WDRA) has licensed two players to launch repositories, which will do record keeping the way depositories function for equities and other financial instruments. Both the licensee agri-centric commodity exchange National Commodity and Derivatives Exchange (NCDEX) and BSE-owned Central Depository Services Ltd (CDSL) are working on meeting the July target.

According to the original timelines, repositories are supposed to start work on July 1. The WDRA has laid down interim milestones and both repositories are in the process of reaching them. These milestones are process, net worth, regulations, bylaws, technology, inter repository connectivity, etc. Samir Shah, managing director and chief executive officer, NCDEX, said: “We are confident we can be ready by July 1, but there are many milestones to reach and work is going on at 

full speed.”

A CDSL source also said it was geared up to launch the repository in July. From the repositories’ point of view, once technology, bylaws, etc are in place, they have to start enrolling repository participants and warehouses. Warehouses will be registered with the WDRA and they have to pay fees to the regulator. However, Shah said, “The registration of members, warehouses, etc will start after repositories receive the commencement of business certificate.”  However, the biggest attraction for the repository business is the pledge of goods for funding, trading in warehouse receipts, and delivery-based trade on the futures exchange. 

However, delivery-based trades on futures exchanges are not big, and collateral financing and pledging commodities will bring revenues. Setting up a repository is a two-step process. According to a source, “the first step was in December last year, when the initial licence was issued by the WDRA and second step is when all the technology and other milestones like bylaws will be put in place. After this the WDRA will audit and then give the commencement of business certificate.”