Modification to Investor Protection Fund (IPF) / Customer Protection Fund (CPF) Guidelines
Summary
This circular modifies the Investor Protection Fund (IPF) and Customer Protection Fund (CPF) guidelines based on representations from stock exchanges. It substitutes Clause 13 to define eligibility for compensation claims arising within three years of the specified period's expiry. Stock exchanges are advised to amend their bye-laws, notify members, and report implementation status to SEBI.
Text
Clause 13 shall be substituted with provisions regarding eligible claims arising within three years from the date of expiry of the specified period.
Claim shall be considered eligible for compensation from IPF/CPF in case where the defaulter member’s funds are inadequate, provided the claim could not have been filed during the specified period for reasons beyond the control of the claimant.
Claim shall not be considered eligible for compensation from IPF/CPF in case where the surplus funds of the defaulter member is returned to the defaulter member; such claim shall be borne by the stock exchange after scrutinizing that it could not have been filed for reasons beyond the claimant's control.
Any claim received after three years from the date of expiry of the specified period may be dealt with as a civil dispute.
Provided further that in cases where any litigations are pending against the defaulter member, the residual amount, if any, may be retained by the stock exchange until such litigations are concluded.
Exchanges are advised to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.
Exchanges must bring the provisions of this Circular to the notice of the member brokers/clearing members of the Exchange and also disseminate the same on the website.
Exchanges must communicate the status of the implementation of this Circular in the Monthly Development Report to SEBI.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Modification to Investor Protection Fund (IPF) / Customer Protection Fund (CPF) Guidelines. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.