MCX revises compensation limits for investors

By: | Published: February 23, 2018 3:54 AM

Multi Commodity Exchange of India (MCX), which has established and maintains an investor protection fund – ‘Multi Commodity Exchange Investor (Client) Protection Fund’ (MCX IPF), has reviewed the present limits of compensation and has decided to revise it.

Multi Commodity Exchange of India, MCX IPF, Sebi, commodity derivatives marketThe maximum amount of compensation available against a single claim of an investor arising out of default of a member of exchange is presently Rs 2 lakh besides the maximum available compensation being Rs 2 crore per defaulter member. (Reuters)

Multi Commodity Exchange of India (MCX), which has established and maintains an investor protection fund – ‘Multi Commodity Exchange Investor (Client) Protection Fund’ (MCX IPF), has reviewed the present limits of compensation and has decided to revise it. The fund was established with the objective of compensating investors in the event of defaulters’ assets not being sufficient to meet the legitimate or admitted claims of investors. It also promotes investor education and awareness to enhance literacy, participation in the commodity derivatives market and utilised for such other purpose as mandated or prescribed by the Securities and Exchange Board of India (Sebi).

The maximum amount of compensation available against a single claim of an investor arising out of default of a member of exchange is presently Rs 2 lakh besides the maximum available compensation being Rs 2 crore per defaulter member. The exchange, in consultation with the IPF Trust, has revised compensation. Now, the maximum amount of compensation available against a single claim of an investor is enhanced to Rs 25 lakh. The restriction in the form of maximum available compensation of Rs 2 crore payable against the claims, of all investors, that is crystallised against a defaulter member, is removed.

The revisions are applicable to only the claims arising from clients of Sebi-registered members where the declaration of default of such member is on or after January 24, 2018. However, the pre-revision maximum amount of compensation available shall continue to be applicable upon all claims against members where the declaration of default of member is prior to January 24, 2018 as well in case of non-Sebi-registered members, a note issued by the exchange said.

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