Commodity exchanges have to compulsorily set up investor protection and service funds, Sebi has said on Tuesdsy.
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Coming out with comprehensive guidelines, the markets regulator said commodity derivatives exchanges have to set up Investor Service Fund (ISF) for providing minimum facilities at various investor service centres.
Sebi said the Investor Protection Fund (IPF) of an exchange should have a maximum of five trustees.
Three of the five should be public interest directors and a representative from Sebi-recognised any investor association. Besides, the exchange’s compliance officer will be part of the trust.
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“All the penalties levied and collected by the exchange, except for the settlement related penalties (including penalties from delivery default), shall be credited to the IPF,” the regulator has said.
The bourses can fix suitable compensation limits in consultation with the IPF trust.
However, the amount of compensation available against a single claim of an investor arising out of defaulter by a member broker should be at least ₹ 1 lakh.
While the bourses can utilise the income earned on the IPF corpus towards promotion of investor education and awareness programmes, the supervision of utilisation of interest on IPF will be with the trust.
With respect to ISF, the regulator said that at the initial stage, the exchange should contribute at least ₹10 lakh towards the fund. Later, the bourse should transfer one per cent of the turnover fees charged from its members on monthly basis towards ISF.
The exchanges are required to maintain separate bank accounts for maintaining corpus of the IPF as well as the ISF.