The Forward Markets Commission (FMC) has asked national bourses not to charge audit fee from their members and directed them to strengthen in-house audit team. Commodity exchanges are required to conduct audit inspections of their members (brokerage firms) once in a year as part of the compliance regime. Currently, the exchanges are charging fee from their members to conduct their audit.
In a directive issued to the bourses, FMC said: “It has been brought to the FMC’s attention that the quality of such audits is often not up to the mark in the absence of sufficient experience and knowledge of the commodity markets and the functioning of the commodity exchanges on the part of the auditors.”
Since audit inspections are an important part of the compliance regime of the exchanges and as they are already collecting annual subscription charges from the members, it is the responsibility of the exchanges to conduct such audits at their own cost, it said.
The FMC has clarified the penalty for short/non-collection of margins stipulated in the circular dated March 14 will be applicable from June 1. It added clients had to pay margins on a ‘T+2’ basis. This shouldn’t be considered as two days from which it was due to be paid, but two days during trade, FMC said.
"Therefore, it is directed that exchanges shall henceforth not charge any fee from the members for conducting their audits," FMC said.
The exchanges are also directed to develop at the earliest adequate in-house capacities to conduct all such audits so that such inspections are done in an effective and timely manner, it said.
The action taken by the national exchanges in this regard should be intimated to FMC by April 30, 2014.
There are six national bourses -- MCX, NCDEX, NMCE, ICEX, ACE and UCX - and 11 regional commodity exchanges in the country.
