MCX ups compensation for default 12 times, to ₹25 lakh

Our Bureau Mumbai | Updated on February 22, 2018 Published on February 22, 2018

Removes ₹2-cr cap on damages to all investors against a single defaulter

In a move to boost investor confidence, the Multi Commodity Exchange has raised the maximum compensation payable to investor in case of default to ₹25 lakh from ₹2 lakh.

MCX has also removed the cumulative cap of ₹2 crore on compensation paid to all investors against a single defaulter. The exchange will pay the compensation from the ₹179-crore investor protection fund (IPF) set up using the penalties levied on members of the bourse since 2012.

The objective of the fund is to compensate investors if defaulters’ assets are not sufficient to meet legitimate claims.

Investor awareness

The enhanced compensation norm will be applicable for declarations of default from January 24 by a SEBI-registered member.

In the event of default, all transactions executed on the exchange platform shall be eligible for settlement from the IPF, subject to the norms of the exchange.

The IPF is managed by three public interest directors, a representative of a SEBI-recognised investor association and the compliance officer of the exchange.

The higher compensation has been implemented in consultation with the IPF Trust to raise the confidence of the investors in the commodity derivatives market, said an MCX spokesperson.

All investors, especially individuals, MSMEs and SMEs, will have a greater sense of protection while transacting on the MCX, he added.

Published on February 22, 2018
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