Clipped from: https://www.thehindubusinessline.com/opinion/columns/from-the-viewsroom/investor-protection-fund-matters/article33135075.ece
SEBI must ensure the corpus stock exchanges hold is adequate
Investor protection was the founding principle of the Securities and Exchange Board of India (SEBI). Yet, for a long time, the regulator displayed sheer apathy towards the investor protection fund (IPF) corpus maintained by stock exchanges, especially the National Stock Exchange (NSE), which enjoys 90 per cent market share. On Wednesday, the NSE said SEBI had directed it to hike the corpus of its IPF to ₹1,500 crore from ₹550 crore currently. SEBI’s direction to the NSE came after BusinessLine raised the concern of low IPF corpus with SEBI chairman Ajay Tyagi in October at a virtual conference.
Even after the increased amount, the NSE’s annual profit will be more than double its IPF corpus. While stock exchanges keep making profits for their marquee shareholders, they cannot leave investors, who are the key contributors to their bottomline, to fend for themselves. SEBI needs to formulate a policy that ensures that the IPF corpus is in line with the rise in trading volumes of the stock exchange and define the matrix for minimum corpus that corresponds with those volumes. It should also be reviewed periodically. If investor protection is the motto, there should be adequate funds for them as well.
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