NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Investor Grievances and Arbitration
Meena, a client, complains that her broker has not paid her funds for a sale. Which fund-related safeguard of the exchange may eventually compensate genuine investors if the broker is declared a defaulter?
The Investor Protection Fund of the exchange is meant to compensate genuine investors, within prescribed limits, when a broker is declared a defaulter and their claim is admitted. The Settlement Guarantee Fund instead covers settlement obligations between members and is not an investor claim fund.
- AInvestor Protection Fund (IPF)Correct
- BSettlement Guarantee Fund
- CTrade Guarantee Fund of the depository
- DBroker's own margin deposit only
Explanation
The Investor Protection Fund maintained by the exchange compensates eligible investors, up to prescribed limits, when a broker is declared a defaulter and the claim is admitted. The Settlement Guarantee Fund protects settlement obligations among members, not investor claims.
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