FMC seeks public views on allowing WSPs hedge in futures mkt

Commodity markets regulator FMC today said it is considering allowing warehouse service providers (WSPs) to hedge their exposure in the futures market and has sought public comments on the same.
Currently, WSPs are not allowed to trade on the commodity exchange in the commodity for which it is accredited by the exchange. However, there is no restriction on trading in the forward segment in delivery-based forward contracts.
In a latest circular, the Forward Markets Commission (FMC) said, "The Commission is considering permitting WSPs to hedge their exposure in the futures market subject to the following conditions and safeguard."
Public comments have been sought latest by August 14.

Among key conditions, FMC said it has proposed that WSP's should deposit their procured commodities on which they wish to take hedging positions, in exchange-accredited Warehouses other than their own warehouses.
The WSP should utilise the futures segment only for the purpose of hedging as per the Hedge Policy of the concerned exchange and the exchange should monitor the hedge positions taken by WSPs on their platform.

The exchanges should take take necessary measures to safeguard market integrity and should operationalise the an online warehouse space booking system.
Among other conditions, FMC said that the exchange should display on a daily basis, warehouse wise details of the space available, goods held, name of the warehouse service provider, details of location of the warehouse on its website.

FMC had received representations from stakeholders and exchanges on this issue, which was discussed in detail in a meeting June 10.