Sebi issues guidelines for depositories’ investor fund

Sebi issues guidelines for depositories’ investor fund

The Securities and Exchange Board of India ( Sebi) has issued guidelines on utilising the Investor Protection Fund (IPF) of depositories.

It is for specific purposes like promotion of investor education, assistance in research activities for development of the securities market and to support initiatives of depository participants, went a Sebi circular issued on Tuesday.

Permission to utilise must be taken from the regulator. Depositories must frame their internal guidelines and get it approved from their board of directors. Then, send it to Sebi within a month from now. Subsequent changes must also be intimated.

The contribution to IPF would be five per cent of the profit made each year since 2012- 13 from depository operations.

Also, all fines and penalties recovered from participants and other users to be deposited in it, including clearing members’ pool account penalty. Plus, deposit interest/ income from any investments made from the fund.

“The management of an IPF will consist of at least one public interest director of the depository, one person of eminence from an academic institution from the field of finance/ an expert in the field of investor education recognised by Sebi and the managing director of the depository,” said the circular.

The depository has to ensure the funds in an IPF are kept in a separate account, designated for this purpose and immune from any liabilities. National Securities Depository and Central Depository Services are the two national ones in the country.

Business Standard New Delhi, 08th June 2016