SEBI Asks NSE To Increase Investor Protection Fund Corpus, Implement Standard Operating Procedure
The logo of Securities and Exchange Board of India (SEBI) is pictured on the door handle of a corference room at the market regulator hearquarters in Mumbai, India. (Photo: BloombergQuint)

SEBI Asks NSE To Increase Investor Protection Fund Corpus, Implement Standard Operating Procedure


The Securities and Exchange Board of India has asked NSE Ltd. to operationalise a detailed standard operating procedure to enhance the effectiveness of the Investor Protection Fund and to improve the investor experience while making claims against defaulting trading members.

The Securities and Exchange Board of India has also advised NSE to increase the size of its IPF corpus to Rs1,500 crore in order to protect the interests of investors in the light of recent broker defaults, the exchange said in a statement on Wednesday.

The adequacy of the IPF corpus will be reviewed on a half yearly basis and incremental contributions will be made to it, if required, as per the statement.

The regulator has asked NSE to operationalize a detailed standard operating procedure.

The standard operating procedure covers procedures and timelines for obtaining information from investors, processing investor claims, review of claims and timeline for declaration of a trading member as a defaulter.

Also read: SEBI Amends Guidelines On Preferential Allotment By Listed InvITs

Further, the SOP strengthens existing processes and includes electronic claim submission, pre-filled forms with information as available with the exchange, claim processing policy, review by independent auditors, among others.

"The SOP is being operationalized to significantly reduce the timelines for making payments to the investors in case of trading member defaults," the exchange said.

A detailed policy for evaluating investor claims is available on NSE website, it added.

It, further, said all eligible investor claims of a defaulting trading member will be paid as per the policy without any aggregate limit per trading member subject to a maximum of Rs 25 lakhs per client.

NSE said it is focused and committed to further strengthening investor protection through a variety of measures including focused investor education, enhanced broker supervision and surveillance in view of the recent defaults of trading members.

Also read: Investor Protection Fund Insufficient, Says SEBI Chairman Ajay Tyagi

Earlier, the regulator directed BSE to conduct annual review to ascertain the adequacy of the IPF corpus of the exchange,disclose the corpus on its website and update the same on a monthly basis.

BSE was advised to implement the SOP prescribed by SEBI for processing of investor's claims and time line for declaration of defaulter.

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