14 Feb 2013

Investor Protection Fund (IPF) for Commodity Futures

In Indian Equities/Shares Market Leader NSE s having Investor protection Fund,But in Commodity Futures there is Non-availability of  Investor Protection Fund is a huge discomfort among many Commodity Futures Investors/Traders.Investor Protection Fund(IPF) for Commodity Futures has been active by the revised Guidelines for Investor Protection Fund at National Exchanges were issued on 28th September, 2011.
Need For Investor Protection Fund
Investors play a significant role in the development of the commodities derivatives markets to achieve the twin objectives of price discovery and risk management. So,the System has responsibility to protect investors’ funds from default risk of any member of the respective exchange. 
The IPF has been set up as a charitable trust to protect and safeguard the interest of investors/ clients in respect of eligible / legitimate claims arising out of default of the member of the exchange. Legitimate claims of investors/ clients shall only be eligible for compensation out of the Fund and in no case the claims of a member/broker or authorized person of the member shall be eligible for compensation out of the IPF.
 Claims & Compensation for Claims

In case Of Default member, inviting the legitimate claimants to file claims against the defaulter member in a specified period of time.The claims received against the defaulter members during the specified period only be eligible for being considered for compensation from the IPF.Any eligible claim arises within three years from the date of expiry of the specified period, such claims will be the discretion of the IPF Trust. Any claim received after three years from the date of expiry of the specified period and not processed by the IPF Trust will be dealt with as civil dispute.The maximum amount of compensation available against a single claim of an Investor/ client arising out of default by a member of the exchange shall be Rs. 2,00,000.
By setting up a Investor Protection Fund (IPF) For Commodity Futures makes the Commodity Investor/Trader would feel free from the Defaulter Risk of Member/Broker.

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