The market regulator, Securities and Exchange Board of India (SEBI) has amended the framework on Investor Protection Fund (IPF) or Investor Service Fund (ISF). The new framework will come into effect from January 1, 2022.
“The Stock Exchanges shall ensure that once a member has been declared defaulter, the claim (s) shall be placed before the Member Core Settlement Guarantee Fund Committee (MCSGFC, the erstwhile Defaulters’ Committee) for sanction and ratification. MCSGFC’s advice w.r.t. legitimate claims shall be sent to the IPF Trust for disbursement of the amount immediately,” the circular said.
“In case the claim amount is more than the coverage limit under IPF or the amount sanctioned and ratified by the MCSGFC is less than the claim amount then the investor will be at liberty to prefer for arbitration outside the exchange mechanism / any other legal forum outside the exchange mechanism for claim of the balance amount,” the circular added.
The new framework has been notified with the objective to align with the practices in the securities market, based on the internal deliberations/discussions, and the feedback received from the Stock Exchanges, it has been decided to modify the Clause 2 (g) which pertains to determination of legitimate claims.
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