Clarification to Circular pertaining to Investor Protection Fund (IPF) and Investor Service Fund (ISF)
Summary
This circular provides clarifications regarding the utilization of Investor Protection Fund (IPF) and Investor Service Fund (ISF) for National Commodity Derivatives Exchanges. It permits carrying forward unutilized IPF interest income and allows its use for research activities subject to trustee approval and a 10% cap. Additionally, it grants a three-year transition period allowing NCDEs to utilize IPF interest in lieu of ISF due to inadequate ISF corpus.
Text
unutilized IPF Interest Income accruing during a specific financial year can be carried forward to the next financial year to enable effective utilization of such money by the exchanges during such extended period.
NCDEs are hereby permitted to utilize IPF interest income for undertaking research activities related to commodities market, provided every such research activity / project can be undertaken only after obtaining prior written approval of the trustees of the IPF Trust... There will be an overall cap on the total amount, not more than 10% of the interest amount of IPF which can be spent on Research activities related to commodities market.
exchanges may also use the IPF of the exchange for meeting their liabilities towards the clients of members not registered with SEBI, if the same is allowed under the byelaws of the exchange.
NCDEs have been granted 3 years period starting April 1st, 2018 to permit utilizing interest on IPF for activities of ISF also.
The provisions of this circular shall come into effect immediately.
The exchanges are advised to make necessary amendments to relevant bye-laws, rules and regulations for the implementation of this circular; bring the provisions of this circular to the notice of the members of the exchange and also to disseminate the same on their website; communicate to SEBI, the status of implementation of the provisions of this circular.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Clarification to Circular pertaining to Investor Protection Fund (IPF) and Investor Service Fund (ISF). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.