The Securities and Exchange Commission (SEC), has released new rules covering warehousing and collateral management to ensure vibrant commodities trading in a bid to ensure the nation has a vibrant commodities trading ecosystem which would, in turn, translate into foreign exchange earnings for the country.
According to the rule, every warehouse that stores commodities to be traded on a registered Exchange must apply to be registered by the Commission.
A statement issued on Sunday in Abuja and released to newsmen stipulated that the Commission must maintain a Register of all registered warehouses.
It noted that a warehouse applying for registration going by the rule must submit proof of ownership or registered-lease deed or rent agreement, along with a disclaimer from the owner of the Warehouse/property providing a waiver of ownership regarding Commodities stored in such Warehouse.
Other requirements are that the warehouse should have appropriate security arrangements in place, have adequate trained staff with expertise and knowledge of scientific storage of commodities, have requisite equipment for weighing and quality measures of commodities, as well as have comprehensive insurance cover for the building, equipment, stock and other items as may be necessary.
The rule also stated that “The warehouse should be located in a place with access to infrastructure to support its operations and have sufficient space for parking and movement of large vehicles, have an efficient system for loading/unloading of Commodity including a proper mechanism for segregation of different kinds/quality of Commodity.”
They are also to submit a Standard Operating Procedure which should cover the procedures for acceptance of commodities to be deposited and delivery of commodities; procedures for weighing, sampling of goods to be deposited in compliance with industry standards and procedure for verification of commodities and communication to depositors.
Other operating standards for the Warehouse include a procedure for maintaining the quality of the goods stored in line with relevant specifications; security policy for ensuring the safety of the goods, the procedure for the use of modern techniques for storage of goods, the procedure for determining and addressing losses due to theft, fire, burglary, fraud, negligence and force majeure events, and procedure for internal verification of stock.
The rules stated that for a Collateral Management Company to be registered by the Commission, an application must be filed to the SEC accompanied by the relevant documents.
Some of the documents are two sets of completed appropriate SEC forms to be filed by the sponsored individuals; a copy of the Certificate of Incorporation certified by the Corporate Affairs Commission where a copy not certified is filed among others.
The rule further requires Fidelity Bond representing 20 per cent of paid-up capital; sworn undertaking to keep proper records and render returns; evidence of minimum paid-up capital of N50m, as well as an application for registration of a minimum of two sponsored individuals one of whom shall be the chief executive officer.