Terms Set For Foreign Firms At Pepper Exchange

While no specific pre-condition has been set out, the capital adequacy norms have been made stringent to ensure that the financial health of the exchange is maintained. The regulatory bodies have also agreed that a closer look would taken regarding the history and the performance of the foreign parties/firms at the international exchanges where they operate.

The FMC, RBI and the Indian Pepper & Spice Trade Association after their meetings last week have placed the capital adequacy norms for the foreign parties at $8,000 to $50,000 for the four categories of traders who would operate at the exchange.

Depending on the category, the foreign trading house may have to pick up an equity stake in the clearing house and pay the necessary margin money.

 

The FMC and the RBI have finalised the process which would ensure that the profits made on the account of trading at the exchange by the foreign participant would be repatriated.

It has been decided that the documentation for this purpose would come directly from the exchange itself. The bank for the exchange clearing house would itself issue a certification/statement of the trading accounts of the foreign parties. This will be the valid document presented to forex dealers for the repatriation of funds. The meetings were held in Mumbai between FMC chairman V K Aggarwal and senior RBI officials, including C R Gopals-undaran, general manager, exchange control department and deputy general manager (for FERA permissions) J Saran. The plan has also been discussed with an independent advisor G Ramchandran.

The bank for the clearing house will be decided upon once it is clear which financial institutions/banks pick up equity of the clearing house. The registration for the body was also received on September 30 and it was later approved at the recent AGM.

Civil supplies ministry sources said the notifications relating to the changes in the Forward Contracts (Regulation) Act to allow for such trading, the recognition to the Kochi Pepper Exchange and the approval of the guidelines for such trading is expected to come soon. Sources said approvals had alr-eady come in from related ministeries and a final approval from the civil supplies ministry is awaited. The next round of talks are expected towards the end of the month, by when the changes in the draft regulations for the functioning of the exchange would be ready.