Commodity markets regulator FMC has set up a working group to examine the feasibility of setting up of a Common Clearing Corporation (CCC) in order to reduce transaction costs of participants.
"It has been decided to constitute a Working Group (WG) to prepare a road map and structure for a Common Clearing system for all commodity exchanges in the country in order to reduce transaction cost of market participants and to strengthen the risk management system," Forward Markets Commission (FMC) said in a office memorandum.
The working panel, which will have to submit the report by August 31, would review the existing Risk Management System and see if the same can be rationalised for adoption by Common Clearing Corporation (CCC)
It will look at the possibility of setting up of a 'common repository' for keeping electronic record of warehouses receipts and establishing a 'common infrastructure facilities' such as warehouses, assayers, aggregators to facilitate delivery of right quality and quantity of commodities for settlement of trade through CCC.
The panel will examine the feasibility of fungibility of warehouses goods to be delivered against the settlement of trade across Exchanges, while also suggest ways and means to make available finances against 'warehouse receipts' in the futures markets.
Among other issues, the panel will review the membership categories and separation of clearing membership and trading membership with introduction of professional, self clearing members in commodities market.
The five-member group, headed by V K Sharma, former RBI Executive Director, would comprise members from National Institute of Public Finance and Policy (NIPFP), Department of Economic Affairs, Warehouse Development Regulatory Authority and FMC.
There are five national and 10 regional level exchanges in the country.
