 "Sebi to finalise stricter warehouse regulations this month")
Sebi has asked Commodity Derivative Advisory Committee to give its views. Sebi will hold a meeting with the committee to discuss new regulations for warehouses anytime during the current month.
Currently, warehouse service providers are recognised by the exchanges, but now their networth is being increased to Rs 50 crore and separate recognition is required from single warehouse of the recognised service provider. A proposal is also being discussed to keep networth in sync with goods stored.
Each delivery center in each commodity shall have atleast one exchange recognised warehouse. While one warehouse service provider (WSP) can be recognised by more than one exchanges. There is also a debate whether a recognised individual warehouse can keep goods from clients on behalf of two commodity exchanges. Sharing of WSPs is acceptable to exchanges, but sharing individual warehouses have two views. However, a warehouse recognised by the exchange, may still be allowed to store goods on behalf of clients who are not participating on the exchange, but exchange goods and other goods shall be stored separately as exchanges have quality norms and WSPs have to record the quality when the commodity was deposited and delivered.
Whole purpose of tightening warehouse norms and networth for WSPs is to ensure a good delivery on the exchange platform as in the past several cases were found where deliveries were not up to the standard. Even Warehouse Development Regulatory Authority (WDRA) has undertaken exercise to tighten norms for warehouses registered with it but for warehouses, it is yet not mandatory to get registered with the WDRA.
Because delivery in agri commodity has been a serious issue and most deliveries are happening on exchanges in agri segment, Sebi has undertaken an exercise to tighten norms for regulating warehouses. Agri-centric exchange National Commodity and Derivative Exchange (NCDEX) has recently on a pilot basis introduced tagging commodity bags stored in its recognised warehouse, which ensures that exchange goods cannot be tampered with as online surveillance at NCDEX will come to know even if a tagged bag is moved from one place to another.
