ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for Collateral Management Companies (CMCs) to biennially review the Standard Operating Procedures to evaluate the adequacy and effectiveness of their accredited warehouses.
The SECP has issued draft amendments to the Collateral Management Companies Regulations, 2019 here on Wednesday through an S.R.O. 1897 (I)/2022.
The CMC may engage in activities including warehousing, ie, provision of quality storage and preservation services for a range of agricultural commodities; issuance of warehouse receipts for agricultural commodity financing; devise a mechanism for pledging, in favor of Eligible Pledgee, the Depositor’s Produce held with the Warehouse Operator against which electronic warehouse receipt has been issued; stock audit, evaluation and verification services; accreditation of warehouses and any other activity as approved by the Commission.
A CMC may grant certificate of accreditation to a Warehouse, subject to the fulfillment of laid down minimum conditions. Upon accrediting a Warehouse, the CMC shall forthwith inform the Commission and shall share the copy of accreditation, along with location, capacity, kind of Produce the Warehouse is suitable for storing, and other relevant information.
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Under the amendments, the CMC shall biennially review the Standard Operating Procedures to evaluate their adequacy and effectiveness in covering the relevant risks, applicable legal and operational requirements, and make changes where necessary, with the approval of its board of directors and subject to consultation with stakeholders and vetting by a professional having relevant expertise.
According to the regulations, the Collateral Management Company” or “ CMC” means an Agriculture Promotion Company registered with the Commission having principal line of business as managing Produce as collateral or engaged in any other activity connected with or related to any Produce or any other activity as may be notified by the Commission.
Copyright Business Recorder, 2022