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Comprehensive guidelines for Investor Protection Fund and Investor Services Fund at Stock Exchanges and Depositories
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....f the existing guidelines for IPF and ISF. 3. The comprehensive guidelines for IPF and ISF are as under: I. Investor Protection Fund A. Constitution and Management of the IPF i. All stock exchanges and depositories shall establish an IPF. The IPF of the stock exchange and depository shall be administered through separate trusts created for the purpose. ii. The IPF Trust of stock exchange and depository shall consist of five trustees as under: a) Three Public Interest Directors (PIDs); b) One representative from the investor associations recognized by SEBI; and c) Chief Regulatory Officer or Compliance Officer. iii. The maximum tenure of a trustee (excluding the Chief Regulatory Officer or Compliance Officer, whose trusteeship would be co-terminus with their service) shall be five years or as specified by SEBI. iv. The stock exchange and depository shall provide the secretariat for their IPF Trusts respectively. v. The stock exchange and depository shall ensure that the funds in the IPF are well segregated and that their IPF is immune from any liabilities of the stock exchange and depository respectivel....
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....eneficial Owners Protection Fund) of the Depository or any other such fund / reserve of the Depository shall be transferred to IPF. e) Any other contribution as may be specified by SEBI from time to time. D. Utilization of IPF and interest or income from IPF i. The amount in IPF and any interest or income generated from the IPF of the stock exchanges and depositories shall be utilized for the purposes as stated in the table below: SN Particulars Utilization 1 IPF Stock Exchanges: a) To meet the legitimate investment claims of the clients of the defaulting TMs. b) To pay interim relief to investors, if any, in terms of paragraph-2(D) of circular No. SEBI/HO/MRD1/ICC1/CIR/P/2021/625 dated September 02, 2021, if any. Depository: a) Promotion of investor education and investor awareness programmes through seminars, lectures, workshops, publications (print and electronic media), training programmes, etc. aimed at enhancing securities market literacy and promoting retail participation in securities market; b) To utilize the fund for supporting initiatives of DPs for promotion of investor education and investor awareness programmes; ....
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....s of IPF by Stock Exchanges and Depositories i. Funds of the IPF Trust shall be invested in instruments such as Central Government securities, fixed deposits of scheduled banks and any such instruments which are allowed as per the investment policy approved by the respective governing boards of the stock exchanges and depository. The investments shall be adequately diversified with single issuer exposure, excluding Government securities, not exceeding 10% of the IPF corpus. The investment policy shall be devised with an objective of capital protection, portfolio diversification, liquidity, along with highest degree of safety and least market risk. ii. The balance available in the IPF as at the end of each month and the amount utilised during the month including the manner of utilization shall be reported to SEBI in the Monthly Development Reports of the stock exchanges and depository respectively. F. Review of IPF Corpus i. The stock exchanges and depositories shall conduct half-yearly review (by end of March and September every year) to ascertain the adequacy of the IPF corpus. In case the IPF corpus is found to be inadequate, the same shall be enhanc....
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....M, registered with the stock exchange, such clients will also be eligible for claims against the defaulting TM for compensation from the IPF. iii. If any eligible claim arises within three years from the date of expiry of the specified period, such claims: a) shall be considered eligible for compensation from IPF in case where the defaulter TM's funds are inadequate. In such cases, IPF Trust shall satisfy itself that such claim could not have been filed during the specified period for reasons beyond the control of the claimant. b) shall not be considered eligible for compensation from IPF in case where the surplus funds of the defaulter TM is returned to the defaulter TM. The same shall be borne by the stock exchange after scrutinizing and satisfying itself that such claim could not have been filed during the specified period for reasons beyond the control of the claimant. iv. Any claim received after three years from the date of expiry of the specified period may be dealt with as a civil dispute. v. The claims of only the investors or clients shall be eligible for compensation from the IPF and in no case the claims of a TM or an as....
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....ettling the following as per the bye-laws of stock exchange: - a) Claims of clients of TM received b) Eligible claims of all stock exchanges of which the defaulter TM was a member; c) Claims of SEBI, if any; d) Pending litigations against the defaulter TM; e) Estimated value of claims of clients of TM yet to be received after the end of specified period. This amount shall be estimated by stock exchanges and kept for a maximum period of three years from the date of expiry of specified period. Any amount realized from assets of defaulter TM and being retained by stock exchange shall be kept in a separate interest bearing account and in case the funds remained unclaimed after the timeline the same shall be returned to the defaulter TM. M. Disclosures i. The stock exchanges and depositories are advised to a) Disclose the corpus of the IPF on its website and update the same on a monthly basis. b) Disseminate its policy on processing investor claims from IPF on their website including the compensation limit fixed by them per investor. c) To frame FAQs on their policy on processing investor claims....
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....sting provisions on IPF and ISF issued through various SEBI circulars mentioned as under shall be rescinded with effect from the date of implementation of this circular: a) Circular No. SMD/RCG/PJ/268/96 dated January 19, 1996, b) Circular No. SMD/Policy/Cir-15/2002 dated June 26, 2002, c) Circular No. MRD/DoP/SE/Cir-38/2004 dated October 28, 2004, d) Circular No. MRD/DoP/SE/Cir-21/2006 dated December 14, 2006, e) Circular No. CIR/MRD/DP/06/2011 dated June 16, 2011, f) Circular No. CIR/MRD/DP/28/2014 dated September 29, 2014, g) Circular No. SEBI/HO/MRD/DP/CIR/P/2016/58 dated June 07, 2016, h) Paragraph 2C of Circular No. SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017, i) Paragraph 1 of Circular No. SEBI/HO/MRD/DDAP/CIR/P/2020/16 dated January 28, 2020 and j) Paragraph 2C of Circular No. SEBI/HO/MRD1/ICC1/CIR/P/2021/625 date September 02, 2021 iii. All previous communications or directions by SEBI, through various letters or e-mails, etc. pertaining to periodicity of review of IPF corpus, utilization of interest of IPF, SOP indicating timeline for processing of claims, review of cl....
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....orm would also include the details available with the exchange such as PAN, address, e-mail ID, mobile no, etc. • The information w.r.t. funds and securities balances to be provided to the client would be provisional as it would be without verification about its correctness/ completeness. • The exchange may mention that the claims would be processed as per the provisions of SEBI Circulars and Regulations and as per Rules, Regulations, Bye-laws of the stock exchange. • The stock exchange can send the pre-filled claim forms to the clients on their registered e-mail IDs, if available with the exchange. The stock exchange shall provide physical copies of the claim forms on request of the investor. T+15 days 4. Submission of claim forms by the client of defaulting TM • The client would be required to fill claim forms either online or offline, by making necessary changes in the pre-filled claim form and providing additional details. • Supporting documents such as relevant bank statements, demat statements, client ledger, etc. needs to be provided along with the claim form. • The client should....
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.... After processing of the claims by the exchange, the claims would be routed to the auditors to assess the veracity and genuineness of the claims including admissibility of the claim. • After processing, auditing of the claims and declaration of the TM as defaulter, the claims shall be placed before Member and Core Settlement Guarantee Funds Committee (MCSGFC) for approval. • In case the assets of the defaulter and / or expelled TM are insufficient to meet the admitted amount, the MCSGFC would recommend payment of investor claims to the Trustees of the Investor Protection Fund Trust (IPFT) for payment out of the Investor Protection Fund (IPF) • The IPFT to approve the payment of the eligible claim amount to the client from the IPF. • The exchange will communicate the decision on claims to the clients post approval by the IPFT. 1. All claims received within the timeline mentioned at point-4, if approved by the IPFT, shall be settled within T+135 days. 2. All claims received after the timeline mentioned at point-4 above but before the declaration of the TM as defaulter, if approved by the IPFT, shall be settled within 60 days ....