Comprehensive guidelines for Investor Protection Fund (IPF) and Investor Services Fund (ISF) for Stock Exchanges having commodity derivatives segment
Summary
This circular revises the guidelines for Investor Protection Fund (IPF) and Investor Services Fund (ISF) for stock exchanges with commodity derivatives segments, effective June 1, 2024. It mandates the establishment of IPFs administered by separate trusts with specific trustee compositions and contribution mechanisms based on turnover fees and penalties. The document outlines procedures for inviting investor claims, eligibility criteria, compensation limits, and disbursement processes following a trading member's default. This section details the operational procedures for the Investor Protection Fund (IPF), including disbursement timelines, asset realization credits, and investment mandates. It outlines permissible uses of IPF interest income for investor education, research, and administrative expenses, alongside requirements for corpus adequacy reviews and public disclosures. Additionally, it establishes guidelines for the Investor Service Fund (ISF), covering its mandatory contribution, investment restrictions, utilization for investor services, and the establishment of Investor Service Centers. This section outlines the infrastructure, staffing, and operational requirements fo
Text
The Circular shall come into force from June 01, 2024.
take steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the same
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 the implementation of the provisions of this Circular
All stock exchanges shall establish an IPF. The IPF of the stock exchange shall be administered through separate Trust created for the purpose
The IPF Trust of the stock exchange shall have a maximum 5 trustees as under: Three Public Interest Directors; One representative from investor associations recognized by SEBI; and Chief Regulatory Officer or Compliance Officer of the stock exchange
The maximum tenure of a trustee (excluding the Chief Regulatory Officer or Compliance Officer of the stock exchange, whose trusteeship would be co-terminus with the service) shall be five years or as specified by SEBI
The stock exchanges shall ensure that the funds in the IPF are well segregated from that of the Exchange and that the IPF is immune from any liability of the stock exchange
One (1) percent of turnover fee charged by the stock exchange from its trading members or ` Ten Lakh, whichever is higher, in a financial year
All the penalties levied and collected by the stock exchange
The specified period for inviting legitimate claims against a defaulter-trading member, shall not be less than one year from the date of declaration of default
The stock exchange shall publish the notice in following newspapers: all editions of at least one English national daily with wide circulation; at least one regional language daily with wide circulation, in regional language, based on the maximum concentration of the clients of defaulter trading member from a particular region or state
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Source: SecMarx — Comprehensive guidelines for Investor Protection Fund (IPF) and Investor Services Fund (ISF) for Stock Exchanges having commodity derivatives segment. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.