To avoid an NSEL like payment crisis at commodity futures exchanges, regulator FMC today asked them to contribute 5 per cent of their revenue every year in Settlement Guarantee Funds (SGF) and constitute a committee for its management.
Tightening the rules for six national commodity exchanges including NSEL group company MCX, FMC also asked the exchanges to include 2 independent directors in the committee for SGF management besides a member of the exchange.
One independent director will be appointed by FMC and another by the exchange with consent of FMC.
The SGF would also include a base minimum capital of members and the accrued interest, refundable deposits made by the Members (other than margins) for trade, penalties charged from members and interest amount and any other income accrued on the investment of funds.
The exchanges' annual contribution will be 5 per cent of their gross revenue of current fiscal onward, while they would also have to contribute a 5 per cent of sum total of gross revenues of preceding financial years from the date of incorporation, subject to a minimum of Rs 10 crore.
"The margin collected by the exchange from the members shall not be part of SGF," FMC said.
The FMC has also decided to re-constitute the Risk Management Group, which would consider various issues relating to SGF.
"These directives shall be implemented by all the National Level Commodity Exchanges by 31st August, 2013," FMC said in a letter to heads of 6 national exchanges -- MCX, NCDEX, ACE, NMCE, Universal Commodity Exchange and Indian Commodity Exchange Ltd.
The break-up of the funds contributed into SGF shall be communicated to the FMC by September 1 2013 and also displayed on the website of the Exchanges and updated on quarterly basis.
These measures follow a continuing crisis in spot exchange NSEL with a possible default of Rs 5,500 crore to investors. On August 20, the NSEL had paid only Rs 92 crore out of scheduled Rs 174.72 crore.