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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Investor Grievances and Arbitration

Which body maintains an Investor Protection Fund at the exchange level to compensate investors in case of a trading member's default, subject to prescribed limits?

The stock exchange maintains the Investor Protection Fund, from which clients of a defaulting or expelled trading member can be compensated up to the prescribed limits. The RBI, the Registrar of Companies and the Income Tax Department do not run this fund.

  1. AThe stock exchangeCorrect
  2. BThe Reserve Bank of India
  3. CThe Registrar of Companies
  4. DThe Income Tax Department

Explanation

Stock exchanges maintain an Investor Protection Fund and a Settlement Guarantee mechanism; compensation to clients of a defaulting member is paid from the fund up to prescribed limits. RBI, the RoC and the tax department do not operate this fund.

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