​​

Rules 91[J-N] PART VII-C

PART VII-C

E-TRADING - SPOT EXCHANGE

91J. Grant of license for establishing spot exchange.- (1) Subject to the provisions of Section 131D of the Act, any person desiring to establish a Spot Exchange in one or more market areas may submit an application in writing to the Director of Agricultural Marketing inFORM-60 for grant of license along with the documents mentioned in that form subject to the conditions specified below:-

(i) The applicant shall specify the place and location of the proposed establishment of Spot Exchange in the market area.

(ii) The applicant shall specify the place, location of the proposed establishment of Spot Exchange, the commodities and respective delivery centers in which it proposes to launch spot trading.

(iii) The applicant shall submit a detailed project report of the Spot Exchange, the amount proposed to be spent for the project, operational and working guidelines as to how the Spot Exchange will be conducted, controlled and operated. The details of settlement guarantee fund to provide guarantee performance of all contracts executed on the spot exchange platform. Facilities proposed to be provided, financial status and resources with supportive documents, Viz. Bank statements and income tax returns, list of permanent assets and liabilities, and other documents showing the credibility for establishment of a Spot Exchange.

(2) The licence fees payable for grant of licence for each Spot Exchange shall be fifteen thousand by demand draft payable in favour of Director of Agricultural Marketing, Bangalore.

(3) The Director of Agricultural Marketing may after satisfying himself about the arrangements made in the spot exchange for conducting electronic spot trading in notified agricultural produce, grant licence in Form-61 for establishment of spot exchange subject to the conditions specified therein.

(4) Before commencement of operation of the Spot Exchange, the applicant shall deposit a bank guarantee worth Rupees twenty five lakhs.

(5) The Director of Agricultural Marketing after giving the applicant an opportunity of being heard, for the reasons to be recorded in writing refuse to grant the license to the applicant who is either not solvent or otherwise disqualified under the Act and Rules

Provided that no order of refusal under this sub rule shall be made unless a reasonable opportunity of being heard is given to the applicant.

 

91K. Power to revoke bank guarantee. -

(1) the bank guarantee deposited by the spot exchange licensee shall be recorded and maintained by the Director of Agricultural Marketing or the Officer authorized by him.

(2) The Director of Agricultural Marketing or any Officer authorized by him shall have the power to invoke the bank guarantee furnished by the spot exchange licensee, in the event of failure to pay the sale proceeds to the agriculturists or sellers or any other dues by the spot exchange licensee, or person operating in the spot exchange for which they are liable to pay to the sellers.

(3) The Director of Agricultural Marketing or any Officer authorized by him shall have right to forfeit the whole amount of bank guarantee if the dues to be paid by the licensee to the agriculturists, or producer seller is more than fifty percent of the bank guarantee or if the licensee is continuously in default for more than three times in making payments or if the dues are more than ten per cent of the goods purchased in a month.

(4) The bank guarantee furnished by the licensee shall be un conditional and the amount guaranteed by the bank or part thereof as the Director of Agricultural Marketing or the Officer authorized by him may demand shall be payable. No other kind of bank guarantee shall be accepted.

(5) Subject to the provision of this act and rules the bank guarantee furnished by the licensee to the Director of Agricultural Marketing or the Officer authorized by him shall be refundable to him on ceasing to be a licensee, if the Director of Agricultural Marketing or the Officer authorized by him is satisfied that there are no liabilities due by the licensee either to the agriculturists, producer seller, market committee or any other person in respect of the transactions for which the bank guarantee is furnished.

(6) The bank guarantee furnished shall be deemed to be held in trust for the purposes for which it is made and shall not be used for or utilized for any other purposes, nor it shall be liable to attachment in any execution by any court or other authority for any other purposes.

(7) The licensee shall recoup the bank guarantee within a period of one month from the date of such forfeiture under sub-rule(3), failing which the license of the spot exchange licensee shall be cancelled

 

91L: Spot exchange licensee to levy charges, fees etc.,.- (1) The spot exchange licensee shall be competent to realize market fee as specified under section 65 of the Act from the buyers of agricultural produce in the spot exchange and shall remit the same to the concerned market committee within the period as specified in the byelaws of the market committee

(2) It may also collect fees relating to membership, VSAT, annual subscription etc., from its members.

(3) Manner of imposition of market fees, transaction charges and other fees:

(a) In respect of deliveries of notified agricultural produce on which market fee is not already paid, the Spot Exchange shall collect the market fee from the buyer at the rate of seventy percent of the market fees payable under Section 65(2) of the Act calculated on the basis of official clearing rate on the date of transaction. Spot Exchange shall maintain complete record of such rate of transaction, delivered quantity, market fees applicable, etc.

(b) The market fee as specified above shall be applicable only in such transactions, which result into deliveries and on which market fee is not already paid earlier.

(c) The spot exchange will introduce two separate types of contracts for a commodity to be traded, namely :-

1. Market fee unpaid farmers’ produce

2. Market fee paid traders’ stock

All trade taking place in the Spot Exchange shall be based on physical delivery.

(d) When a farmer will sell his produce on spot exchange platform, it will be the responsibility of the spot exchange to collect market fee from the buyer and to remit the same to the Market Committee. All such sale transactions will be executed in farmer’s produce contracts. In respect of such transactions, spot exchange will maintain complete record of rate of transaction, delivered quantity, market fee applicable, etc.

(e) When a trader sells his stock on spot exchange, he will sell the same in Market fee paid traders’ stock contracts. Since market fee will not be applicable on such commodities again, spot exchange will maintain a complete check on delivery of such stock and the relevant records relating thereto so as to prove that market fee on such commodity was paid earlier. At the time of delivering such produce in its warehouse, spot exchange will insist for submission of specified form, in Form No. 62, to be signed by a trader holding concerned Market Committee license.

(f) In accordance with the procedure specified above, spot exchange will be able to segregate the trades properly and keep track of all transactions, where market fee is required to be collected from the buyer.

(g) Spot Exchange will issue a certificate as per Form No. 63 about payment of market fee on such goods at the time of discharge of produce from its warehouse. Such certificate shall be kept in the vehicle carrying the goods in the market area. Spot Exchange shall maintain complete record relating to issue of such certificate and the supporting evidence, which can be verified by the Director or any officer authorized by him or concerned Deputy / Assistant Director, Agricultural Marketing or Secretary, Market Committee at any point of time. Such certificate shall be sufficient proof of compliance with market fee, so far as the market committees or authorities are concerned.

(h) The membership shall be available to all including farmers or their groups / co-operatives / companies. The membership fee for the farmers group / co-operatives shall be decided in consultation with the Director of agricultural marketing.

91M: Duties and responsibilities of spot exchange licensee.-

(1) The spot exchange licensee shall:-

(i) provide the facilities and services as specified in Section 131D(4).

(ii) Frame the operational and working guidelines as to how the spot exchange will be conducted, controlled operated and the details of trading, delivery, clearing, settlement etc. and shall submit the draft of the same along with the application for license. Such guidelines shall be in consonance with the provisions of the Act and the rules made there under.

(iii) Furnish all the necessary information to the Director of Agricultural Marketing or the Officers authorized by him and to the concerned market committee, as he may require in this behalf.

(iv) The spot exchange licensee shall also be responsible for

(a) Keeping a copy of the operational and working guidelines open to inspection at its office by the Officers of the Department of Agricultural Marketing at all reasonable times.

(b) Maintain records electronically or in a register showing the fees and all other charges collected by them from the sellers and buyers.

(c) Submission of periodical reports and annual reports containing such information as may be directed by the Director of Agricultural Marketing or any Officer authorized by him.

{d} It shall have transparency in operations and decision making related to entire operations. It shall have system of well organized and capitalized brokerage houses, where members/brokers with reasonable capital adequacy can participate.

{e} The management running the exchange shall be reliable, effective and impartial and also with experience in handling commodity markets. The ownership/ management and members / brokers of exchange shall be separate persons/bodies.

(2) Every price quotation made by a trader, buyer or agent in respect of any notified agricultural produce on spot exchange shall always be as per the contract specification notified by the Exchange in advance.

(3) The spot exchange licensee shall keep regular and proper accounts of every e-trading transaction of agricultural produce in an electronic form or in a register

Explanation:- Making entries collectively relating to more than one transaction shall not be deemed to be keeping regular and proper accounts within the meaning of this sub-rule.

(4) The spot exchange licensee shall arrange for the storage of agricultural produce brought by the agriculturist, producer-seller when it is not sold or when the producer-seller desires to store the agricultural produce till he obtains better price, in their godowns or godowns of the purchasers or processors or warehouseman. The spot exchange may fix every year, the charges for such storages.

(5) The spot exchange licensee shall declare the details of address of warehouses, godowns, and storage places where agricultural produce have been stocked/stored and shall submit monthly returns to the Director of Agricultural Marketing or the Officer authorized by him.

(6) The spot exchange license shall not involve in any misconduct or misconduct or buying or selling of notified agricultural produce on its own account. It shall provide periodical statement regarding total stock of various produce lying in its warehouses located in the State, so that the Government may check and monitor any intention to create artificial scarcity which may lead to rise in prices of such agricultural produce. If the licensee is found to be involved in any act of misconduct or failure in giving details, the Director of Agricultural Marketing shall take immediate legal action for suspending or canceling the license.

(7) It shall provide real time price and trade related information on notified agricultural commodities in the market area, district, state and at national level and shall, as far as possible provide permanent electronic price display board at yards of the market committees in the area of its operation for which the Market Committee shall provide sufficient space, infrastructure, PC, power supply and manpower at its own cost, while the spot exchange shall provide its connectivity, software and real time price information free of cost.

(8) It shall ensure delivery of commodities sold by the agriculturists only after full payment by the buyers.

(9) Seller shall give physical delivery at the Exchange designated warehouse, or the godowns of the farmers which are approved by the spot exchange where grading and quality certification will be done and warehouse receipt will be issued to the agriculturist. After obtaining warehouse receipt, he can sell the same on spot exchange platform. In case he has kept his produce at the exchange designated warehouse earlier, he may sell the same any time through any member of the recognized spot exchange and tender warehouse receipt

(10) The prices quoted by the buyer shall be net payable to the farmer excluding the market fee, brokerage, charge etc. The transport cost and other miscellaneous costs delivered at warehouses shall be on the account of buyer and the buyer shall quote only the net payable price to the farmer.

(11) The Spot Exchange licensee shall grant registration to its members, sub-brokers, franchisees and clients and other market functionaries, which will enable them to deal in agricultural produce at Spot Exchange. If they are registered with the exchange they need not have any license from concerned market committee. If such members or clients wish to participate in concerned market committee auction or to buy produce directly from agriculturists outside the exchange platform, they have to take relevant license from concerned market committee.

{12} it shall not be a mandatory for any agriculturist to be a member to sell his produce on the exchange platform. He will be entitled to sell his produce as a client through a member of exchange.

91N: Powers of the Director of Agricultural Marketing to make enquiry and inspection:- (1) The Director of Agricultural Marketing shall have the power to enquire and inspect the affairs of spot exchange licensee and may authorize any of his subordinate Officer for such enquiry or inspection. An order authorizing inquiry or inspection by Director of Agricultural Marketing or the Officer authorized by him shall, amongst other things contain the following:-

(i) The name of the persons authorized to conduct the inquiry or inspection.

(ii) The name of the spot exchange licensee whose affairs are to be inquired into or whose accounts and records are to be inspected;

(iii) The specific point or points on which an inquiry or inspections is to be made, the period within which the inquiry or inspection is to be completed and report submitted to the Director of the Agricultural Marketing.

(iv) Any other matter relating to the inquiry or inspection of the offices or any person operating in the spot exchange.

(2) If the inquiry or inspection cannot be completed within the period specified in the order referred to in sub-rule (1), the person conducting the inquiry or inspection shall submit an interim report stating the reasons for not completing inquiry or inspection in time and the Director of Agricultural Marketing may grant such extension of time for the completion of the inquiry or inspection, as he may deem necessary or may withdraw the inquiry or inspection from the person to whom it is entrusted and hold the inquiry or inspection himself or entrust it to such other person as he deems fit.

(3) On receipt of the order referred to in sub-rule(1), the person authorized to conduct the inquiry or inspection shall proceed to examine the relevant books of accounts and other documents in possession of the spot exchange licensee or any of its Officers, members, agents or servants or any person operating therein and obtain such information or explanation from any such persons in regard to the transactions and working of the respective markets, centers as he deems necessary for the conduct of such inquiry or inspection.

(4) The person authorized to conduct the inquiry or inspection shall submit the report to the Director of Agricultural Marketing, on all the points mentioned in the order referred to in sub-rule (1) and the report shall contain his findings and the reasons there for supported by such documentary or other evidences as recorded by him during the course of his inquiry or inspection. The Director of Agricultural Marketing may pass orders of suspension or cancellation of licence as he may consider just and proper, after giving reasonable opportunity of being heard.​