Market regulator asks bourses to increase the size of IPF corpus

Market regulator Sebi has directed stock exchanges to enhance their investor protection fund (IPF) corpus

The NSE on Wednesday said Sebi had advised the exchange to increase the size of its IPF corpus to Rs 1,500 crore. A day earlier, BSE had said it had received a letter from Sebi to enhance the effectiveness of IPF. At present, NSE has an IPF corpus of Rs 550 crore, while BSE has about Rs 785 crore.
 

IPF is used to repay clients in case of broker default. It is also used for promoting investor education and research.

“NSE 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,” the exchange said in a release.
 

NSE pays up to Rs 25 lakh per client from the IPF in case of a default by a trading member, while BSE pays up to Rs 15 lakh per client.
 

Sebi has also directed exchanges to conduct an annual review to ascertain the adequacy of the IPF; disclose IPF corpus on a monthly basis and implement a standard operating procedure for processing investor claims. Exchanges have to set aside certain portion of their income towards the IPF.