Storage Monitoring Agreements (SMA)

Storage Monitoring Agreements (SMA)

Storage Monitoring Agreements (SMA) are a type of stock monitoring service where inventory is subject to inspection, control, and supervision at intervals determined by banks or financial institutions.

Unlike CMA systems, SMA offers greater flexibility in implementation and is generally preferred due to its operational simplicity and cost efficiency.

SMA is typically applied to goods that are already under some form of protection or control. It is widely used in bonded warehouses under customs supervision. However, SMA can also be implemented in private storage facilities. In such cases, the bank relies on periodic verification of stock existence and condition, supported by visual and quantitative reporting (daily, weekly, or as required).

Under SMA arrangements, the Stock Supervisor (MP) is responsible for inspecting, counting, and reporting on pledged commodities that serve as collateral for bank financing, according to pre-agreed terms and schedules defined by the bank.

This process ensures that physical verification, storage conditions, and technical safety standards of the goods are maintained in accordance with MP internal standards.

An SMA contract is a tripartite agreement between the financing institution (pledging bank), the borrower (pledger), and the Stock Supervisor (MP). Unlike CMA, SMA specifically defines the frequency and scope of stock supervision activities agreed upon by the parties.

These agreements are ideal for companies engaged in import and export operations with bonded storage facilities (Type A or Type B warehouses).

One additional advantage of SMA structures is that companies may gradually release non-customs-cleared goods from bonded areas, improving operational flexibility.

Risk Identification

CMA/SMA systems help financial institutions reduce exposure to sudden market fluctuations by providing continuous monitoring and reporting. This structure also allows financial risks to be distributed over a longer period.

Risk Assessment

Collateral management systems reduce risk exposure and are recognized under the Basel II Capital Accords. They are widely implemented by European banks and international financial institutions.

Storage Control

Storage operations are secured through legally binding warehouse lease agreements, ensuring regulatory compliance and operational control.

Production & Additional Services

Sampling, laboratory analysis, and insurance of stored commodities can be provided as optional services upon request.

Reporting

MP provides real-time and detailed stock status reports, ensuring transparency and accurate monitoring of inventory conditions.

Risk Control

Due to legally registered lease agreements, pledged goods cannot be seized by third parties.

Commodity & Risk Management

Under CMA/SMA arrangements, MP acts as the custodian of pledged goods until all contractual obligations with the bank are fulfilled. All movements, including delivery, sale, or export of goods from bonded storage, are only permitted upon written “Release Instructions” issued by the bank.

All stock movements are reported to the bank within the same operational day.

MP ensures that commodities are maintained and protected according to international standards, operating as an independent and legally structured custodian by leasing storage facilities from the owner.

Continuous monitoring of stock levels and movements through daily reporting minimizes operational risks and ensures full control over pledged goods under MP custody.

CMA/SMA services provide banks with effective solutions to reduce operational risks and improve portfolio performance. We ensure that all stored commodities comply with contractual quantity and quality standards.

MP monitoring reports are recognized by international financial institutions and industrial organizations. Our services are widely used by manufacturers and trading companies dealing with bulk or packaged commodities seeking structured financial solutions.

MP manages pledged stock with full custodial responsibility, ensuring accurate quantity verification and quality control during incoming shipments, preventing financial discrepancies.

Client Benefits

• Continuous monitoring of borrower and collateral systems
• Reduced operational and financial risk exposure
• Improved bank credit risk management and performance evaluation
• Regular online reporting and information flow
• Early warning system to prevent discrepancies
• Technical and industrial expert evaluation services
• Reliable and certified reporting system

Control & Custody Operations

Stock inspection specialists perform real-time verification of goods, including:

• Stock counting and receipt verification
• Physical inspection and monitoring
• Assessment of commodity condition and appearance
• Counting of packaged units such as bales, rolls, or similar forms
• Weight determination via inspection reports
• Tonnage verification using port or industrial weighing systems
• Recording all stock movements in daily reports and final certified documents