FMC asks bourses to conduct free audit of member brokers
Moneylife Digital Team 28 April 2014

Since bourses are already collecting annual subscription charges from members, it is the responsibility of the exchanges to conduct such audits at their own cost, the commodity markets regulator said

Commodity markets regulator, Forward Markets Commission (FMC), has asked national exchanges not to charge audit fee from their members and directed them to strengthen in-house audit team.

 

Commodity exchanges are required to conduct audit inspections of their members (brokers) once in a year as part of the compliance regime. Currently, the exchanges are charging fee from their members to conduct their audit.

 

In a directive issued to the bourses, the comodity markets regulator said: "It has been brought to the FMC's attention that the quality of such audits is often not up to the mark in the absence of sufficient experience and knowledge of the commodity markets and the functioning of the commodity exchanges on the part of the auditors."

 

Since audit inspections are an important part of the compliance regime of the exchanges and as they are already collecting annual subscription charges from the members, it is the responsibility of the exchanges to conduct such audits at their own cost, it said.

 

"Therefore, it is directed that exchanges shall henceforth not charge any fee from the members for conducting their audits," FMC said.

 

The exchanges are also directed to develop at the earliest adequate in-house capacities to conduct all such audits so that such inspections are done in an effective and timely manner, it said.

 

There are six national bourses -- Multi-Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), Ahmedabad-based NMCE, ICEX, ACE and UCX -- and 11 regional commodity exchanges in the country.

Comments
Nagesh Kini
7 years ago
The FMC needs to maintain a panel of names of really dedicated and market knowing auditors.
The CAG and RBI maintain panels.
I know from experience this system delivers.
Nagesh Kini
7 years ago
The FMC needs to maintain a panel of names of really dedicated and market knowing auditors.
The CAG and RBI maintain panels.
I know from experience this system delivers.
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