- Investor Protection Fund (IPF) has been set up as a trust under the Bombay Public Trust Act 1950 under the name of ‘National Stock Exchange Investor Protection Fund Trust’ and is administered by Trustees.
- The Investor Protection Fund (IPF) is created in accordance with the guidelines provided by the Ministry of Finance, Government of India and the SEBI.
The Objectives of the Investor Protection Fund (IPF)
- To compensate clients of defaulter trading members
- To make investor claims, which may arise out of non-settlement of obligations by the trading member, who have been declared defaulter/expelled, in respect of trades executed on the Exchange.
- To promote investor education, awareness and aid research activities.
Quantum of Compensation
The maximum amount of claim payable from the IPF to the Investor is Rs. 15 Lakh.
Procedure for filing claims
- A notice is published in widely circulated daily newspapers notifying the trading member who has been declared defaulter/expelled member.
- Claims against the defaulter/expelled member specified in the notice are required to be made, on or before three months from the date of such notice.
- The claimant is required to submit the requisite documents/details in substantiation of his claim.
- The admissibility of the claim is decided by the Defaulter’s Committee which recommends the payment of the admissible amount out of the Investor Protection Fund in case of insufficient assets in respect of the defaulter/expelled member vesting in the Exchange.
- Both the Committee and the Trustees may at any time and from time to time require any person to produce and deliver any documents or statements
ofevidence necessary to support any claim made or necessary for the purpose of establishing his claim.
- In default of delivery of such documents, the Committee and the Trustees may disallow (wholly or partly) any claim made by him.
- On recommendation by the Defaulter’s Committee, the Trustees, if satisfied that the default on which the claim is founded was actually committed, may admit the claim and act accordingly.
- The Trustees have an absolute discretion as regards the mode and method of assessing the nature of the claims including their genuineness and at their discretion may accept, reject or partially grant or allow claims and make payment thereof subject to the limits mentioned above the Trustees in disallowing (whether wholly or partly) a claim for compensation shall serve notice of such disallowance on the claimant.