NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Investor Grievances and Arbitration
A trading member fails to redress a client's complaint and is declared a defaulter or expelled by the exchange. Which fund of the exchange can be used to compensate eligible investors up to the specified limit?
The Investor Protection Fund of the exchange is used to compensate eligible investors when a trading member defaults or is expelled and the client's claim is admitted, subject to the prescribed ceiling. The settlement guarantee fund exists to complete settlement, not to compensate investor claims.
- AInvestor Protection FundCorrect
- BCore Settlement Guarantee Fund margin
- CEmployees' Provident Fund
- DConsolidated Fund of India
Explanation
The Investor Protection Fund maintained by the exchange is used to compensate genuine investors whose claims against a defaulting or expelled member are admitted, up to the prescribed ceiling. The settlement guarantee fund covers settlement obligations, not investor compensation.
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