SEBI Revises Guidelines on ‘Investor Protection Fund’ and ‘Investor Services Fund’

Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/81, Dated: 30.05.2023

The SEBI has merged and revised the guidelines on Investor Protection Fund (IPF) and Investor Services Fund (ISF) maintained by stock exchanges and depositories. These guidelines cover the constitution and management of the IPF. As per the revised guidelines, all stock exchanges and depositories are required to establish an IPF.

The IPF of the stock exchange and depository shall be administered through separate trusts created for the purpose. The IPF Trust of the stock exchange and depository shall consist of five trustees. The maximum tenure of a trustee (excluding the Chief Regulatory Officer or Compliance Officer, whose trusteeship would be co-terminus with their service) shall be five years or as specified by SEBI.

Further, the SEBI has provided for the contribution to IPF by exchanges and depositories and utilization of IPF. The amount in IPF along with any interest or income generated from the IPF of the stock exchanges and depositories shall be utilized for the purposes as provided in the guidelines.

The funds of the IPF Trust shall be invested in instruments such as Central Government securities, fixed deposits of scheduled banks and any such instruments which are allowed as per the investment policy approved by the respective governing boards of the stock exchanges and depository.

The balance available in the IPF as at the end of each month and the amount utilised during the month including the manner of utilization shall be reported to SEBI in the Monthly Development Reports of the stock exchanges and depository respectively.

Also, the stock exchanges and depositories are required to conduct a half-yearly review (by the end of March and September every year) to ascertain the adequacy of the IPF corpus. In case, the IPF corpus is found to be inadequate, the same shall be enhanced appropriately. The guidelines shall be effective from 29.06.2023.

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