SEBI issues framework for utilization of Financial Security Deposit available with Clearing Corporations and WDRA

Feb 13, 2019 | by Avantis RegTech Legal Research Team

Securities and Exchange Board of India (SEBI) in consultation with Warehousing Development Regulatory Authority (WDRA) and Clearing Corporations, on February 11, 2019, has passed a Circular issuing framework for utilization of Financial Security Deposit (FSD) available with recognized clearing corporations having commodity derivatives segment.

The following norms are:

·         After accreditation, the clearing corporations should immediately provide the details of WDRA registered warehouses accredited by them with full details of warehouseman registration, warehouse registration, WSP, address etc. to WDRA. After that WDRA will share the details of the security deposit received to the Clearing Corporations. Clearing Corporations will inform the changes to the warehouses as per the format (Page 4). WDRA should inform Clearing Corporation about any changes.

·         Clearing Corporations should continue to compute FSD requirement.  The deposits placed by the Warehouse Service Providers (WSPs) with WDRA for Exchanges or Clearing Corporations specific outstanding eNWRs should be considered by the Clearing Corporation in calculation of available FSD for the WSP.

·         The accredited WSP will be liable for any losses resulting from any action or inaction of its warehouses that prevents the buyer or seller from exercising their rights. The Clearing Corporation should compensate the aggrieved clients for any such losses

·         The settlement of security deposit by WDRA originates only after the stocks stored, if any, are disposed off/ withdrawn by the holder.

·         This arrangement is only for stocks stored in WDRA registered / Clearing Corporation accredited Warehouses for the purpose of delivery on exchange platform and for which e-NWR has been issued.

·         The discrepancy claim received by any agency (Clearing Corporation or WDRA) will be brought to the notice of other agency irrespective of invoking the security deposit.

This circular will come into effect from 30 days from the date of this circular.

[Circular No. SEBI/HO/CDMRD/DNPMP/CIR/P/2019/29]




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