In a significant development aimed at bolstering investor confidence and protection, the National Stock Exchange (NSE) has announced an increase in the maximum compensation limit provided by its Investor Protection Fund Trust. Effective August 13, 2024, the new limit for claims arising from the expulsion or default of trading members has been raised from Rs 25 lakh to Rs 35 lakh per investor per claim.
This decision follows recommendations from the Member and Core Settlement Guarantee Fund Committee, previously known as the Defaulters' Committee. The Investor Protection Fund Trust, which was established to safeguard investors' interests when the assets of defaulters are insufficient to cover their claims, will now offer enhanced protection against financial losses.
Under the revised limit, investors can now claim up to Rs 35 lakh per claim in cases where the defaulting member’s account does not have enough funds to meet the admitted claims. This increase is expected to provide greater security and assurance to investors, reflecting the NSE’s commitment to strengthening its protective measures.
The Investor Protection Fund Trust plays a crucial role in the financial ecosystem of the NSE. It is managed by a board of trustees, including public representatives, investor association members, NSE board members, and senior officials. This fund aims not only to compensate investors but also to promote investor education, awareness, and research. The NSE’s move comes at a time of remarkable growth and performance for the exchange. The unique registered investor base on the NSE has surpassed the ten-crore mark, with a total of 19 crore client codes now registered. This milestone underscores the increasing participation and trust in the Indian stock market.
Overall, the increase in the Investor Protection Fund limit is a proactive step by the NSE to enhance investor protection and confidence. By extending the maximum claim limit, the NSE aims to provide a more secure trading environment, reinforcing its role as a leading and investor-friendly exchange in India’s financial market.
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