Revised Warehousing Norms in the Commodity Derivatives Market for Agricultural and Agri-processed Commodities Traded on the National Commodity Derivatives Exchanges
Summary
This circular establishes revised warehousing norms for agricultural and agri-processed commodities traded on National Commodity Derivatives Exchanges to ensure good delivery. It mandates that exchanges frame guidelines for Warehouse Service Providers (WSPs), warehouses, and assayers based on minimum standards set by SEBI. The document outlines specific requirements for WSP accreditation, eligibility, financial net worth, security deposits, and Financial Security Deposits. This section outlines exposure limits for financial securities and daily monitoring requirements for warehouse receipts. It establishes fit and proper criteria, corporate governance norms, and specific obligations for compliance officers and standard operating procedures. Additionally, it mandates Know Your Depositor policies, PAN verification, and detailed infrastructure standards for accredited warehouses. This section mandates WSPs to maintain pest control, ensure warehouse autonomy, and prioritize futures commodities. It requires exchanges to accredit assayers transparently and ensures warehouses are registered with WDRA and adequately insured against various perils. Finally, it establishes rigorous monitorin
Text
SEBI decided to fasten the responsibility of settlement of the futures contract, including good delivery on the commodity derivatives exchanges. Every commodity derivatives exchange shall ensure guarantee for settlement of trades including good delivery under Regulation 44D(2) of SECC Regulations.
It is incumbent upon the commodity derivatives exchanges to have in place comprehensive framework of norms for adherence by the Warehouse Service Providers (WSP), warehouse, assayers and other allied service providers so as to exercise a robust mechanism for ensuring good delivery.
In supersession of the earlier norms, the national commodity derivatives exchanges shall frame guidelines in accordance with the following revised norms for their accredited WSPs, warehouses, assayers etc.
The norms prescribed in this circular are the minimum requirements/standards for compliance by the exchange accredited WSPs, warehouses and assayers and are to be complied with in addition to those laid down by WDRA. The Exchanges are at liberty to prescribe additional norms/guidelines provided that such additional norms specified by the exchanges are not in contravention with the instruction issued in this circular.
The exchanges shall follow a transparent process for accreditation of WSP by issuing open advertisements in leading newspapers and/or putting the same up on the exchange website and through a transparent selection process thereafter. The accreditation of the WSP shall be done with the approval of the Risk Management Committee of the Board of Directors of the Exchange.
A WSP can be accredited with more than one exchange. In such case, no exchange shall mandate that its WSP cannot provide services to another exchange. However, it shall be ensured that same warehouse may not be shared by more than one Exchange.
The accreditation of a WSP shall, unless any expulsion proceedings pending against it, be subject to renewal after a period of 3 years considering WSP’s performance during accreditation, quality of services and number of client complaints and effective resolutions thereof etc.. The renewal shall be approved by the Risk Management Committee of the Exchange.
A WSP shall be a corporate body and is in public warehousing business.
The Promoters/ Promoter Groups of the WSP should be responsible persons/entities of repute with a good business reputation and credibility, and who are in the business of public warehousing for at least 3 years as on the date of their operation and have knowledge of, and experience in, generally accepted warehousing and handling practices for Commodities.
The exchange in its discretion, may relax the above norm of 3 years provided that the WSP or its promoter/promoter group: i. Meets all other criteria ii. Submit an undertaking that they shall meet any additional norm specified by exchanges within the time frame as specified by it or 3 years whichever is earlier.
WSP and Promoters/ Promoter Group of WSP shall have no record of serious violation of laws or being expelled by any Exchange in last three years.
An accredited WSP shall have at least, subscribed and paid-up share capital of `10 crore.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Revised Warehousing Norms in the Commodity Derivatives Market for Agricultural and Agri-processed Commodities Traded on the National Commodity Derivatives Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.