FMC unveils uniform warehouse accreditation norms for bourses

The commodities regulator has directed national level bourses to follow the new norms by March 31, 2015

The Forward Markets Commission (FMC) has come out with uniform norms for giving accreditation to warehouse services providers by commodity exchanges, a step to inspire confidence among market participants.

This will also strengthen warehouse facilities in the commodity futures market. It assumes significance in the backdrop of Rs 5,600-crore payment scam at NSEL which exposed the poor warehousing monitoring.

FMC has directed the national level bourses to follow the new norms by March 31, 2015. It has also asked the bourses not to allow existing warehouse services providers to operate beyond June 30, 2015, according to a circular issued by the commodity markets regulator.

Commodity exchanges at present follow different norms and standards while giving accreditation to warehouses on their platform.

"This is for the first time that the FMC has framed uniform norms for accreditation of WSPs (warehouse services providers) to ensure credibility of warehouses and the warehousing receipts issued by them. It is necessary that the WSPs accredited by exchanges inspire confidence among the market participants," a senior FMC official told PTI.

As per new norms, the exchanges can give recognise warehouses having a minimum networth of Rs 25 crore. However, for warehouses providing services for single commodity at a particular location, the minimum networth requirement may be relaxed to Rs 10 crore.

Warehouses should be in the public same business for last at least three years. Their promoters should have a good business reputation and credibility, says the circular.

That apart, warehouses are also required to furnish a security deposit in the range of 3-5 per cent of the value of the goods worth up to Rs 500 crore in the warehouse.

To ensure good corporate governance, FMC said: "Management of WSP or entities owned or controlled by management of WSP/Group concerns or persons 'acting in concert' shall not be allowed to trade on the commodity exchange in the commodity for which it is accredited by exchange."

FMC further said that warehouses should have a professional management team to oversee its functioning and operations. They should submit a networth certification and financial statements to exchange every six months.

Warehouses should also have a 'Customer Grievance Cell' and comply with 'Know Your Depositor Policy' from time to time.

While giving accreditation to warehouses, exchanges should see if warehouses have infrastructure facilities for proper handling and storage of commodities.

Warehouses are required to insurance cover of the stock stored in the warehouses, periodic audit of the stock, electronic record of the information of the warehouses among other.

The exchanges are also directed to make suitable amendments to the relevant bye-laws, rules and regulations as required for the implementation of these norms, the FMC said.

There are four national and six regional level exchanges operating in the country.