Modification to Investor Protection Fund (IPF)/ Customer Protection Fund (CPF) Guidelines
Summary
SEBI modifies the Comprehensive Guidelines on Investor Protection Fund (IPF) and Customer Protection Fund (CPF) to harmonize practices among stock exchanges. The circular substitutes specific clauses regarding claim periods, liability for late claims, and the disbursement of compensation from funds. Stock exchanges are mandated to amend their bye-laws and report implementation status to SEBI.
Text
The Circular dated October 28, 2004 as clarified by Circular dated December 14, 2006 shall hereinafter be referred to as the “Comprehensive Guidelines on IPF/CPF of Stock Exchanges” or “The Comprehensive Guidelines”.
The specified period for inviting legitimate claims against a defaulter member, shall be a minimum of ninety days.
If any eligible claims arise within three years from the date of expiry of the specified period such claims shall be borne by the stock exchanges without any recourse to the IPF/CPF.
any claims received after three years from the date of expiry of the specified period may be dealt with as a civil dispute.
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.
The compensation shall be disbursed to the investor from the IPF/ CPF incase there is a shortage of defaulter broker’s assets after its realization.
The Stock Exchange shall ensure that the amount realized from the assets of the defaulter member is returned to the defaulter member after satisfying the claims of the Stock Exchange and SEBI in accordance with the bye-laws of the Stock Exchange.
in case of a member broker having membership on multiple stock exchanges, amount realized from the assets of the defaulter member shall be returned to the said member only after satisfying eligible claims of the concerned stock exchange, SEBI, and other stock exchanges.
make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.
bring the provisions of this Circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website.
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.