Framework for utilization of Financial Security Deposit (FSD) available with Clearing Corporations and WDRA
Summary
This circular rationalizes the financial security deposit burden on warehouse operators by allowing Clearing Corporations to utilize security deposits maintained with WDRA. It mandates information sharing between Clearing Corporations and WDRA regarding accredited warehouses and their respective security deposits. The framework establishes procedures for compensating clients using these combined funds in case of losses related to delivery obligations.
Text
SEBI specified norms requiring Financial Security Deposit (FSD) from Warehouse Service Providers (WSPs), while WDRA also mandated Security Deposits linked to outstanding negotiable warehouse receipts, creating additional financial burden.
Clearing Corporations shall provide details of WDRA registered warehouses accredited by them to WDRA, which will share security deposit details back; both parties must inform each other of any changes.
Clearing Corporations shall compute FSD requirement as per SEBI circular dated September 27, 2016, considering deposits placed by WSPs with WDRA for Exchange/Clearing Corporation specific outstanding eNWRs.
Accredited WSP is liable for losses preventing buyers/sellers from exercising rights; Clearing Corporation shall compensate aggrieved clients by debiting FSD, and if insufficient, WDRA shall make security deposit available within 7 days.
The settlement of security deposit by WDRA originates only after the stocks stored, if any, are disposed off or withdrawn by the holder.
This arrangement applies only to stocks stored in WDRA registered / Clearing Corporation accredited Warehouses for delivery on exchange platform for which e-NWR has been issued.
Discrepancy noted or claim received by any agency (Clearing Corporation or WDRA) shall be brought to the notice of the other agency irrespective of invoking the security deposit.
The circular shall be effective from 30 days from the date of this circular.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — Framework for utilization of Financial Security Deposit (FSD) available with Clearing Corporations and WDRA. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.