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The SEBI has directed stock exchanges to ensure that the amount realised from the liquidated assets of a defaulter member be returned after satisfying the claims of the exchange and the regulator.
For members with multiple memberships of stock exchanges, the amount realised will be returned only after satisfying eligible claims from SEBI and all the stock exchanges of which they are members.
Earlier rules said such amounts used to be credited to the Investor Protection Fund (IPF) or the Customer Protection Fund (CPF).
In its circular on Thursday modifying IPF/ and CPF guidelines, SEBI said that the specified period for inviting legitimate claims against a defaulter member will be a minimum of 90 days. Any eligible claims arising within three years of the specified period would be borne by the exchanges without recourse to SEBI.
If claims are received after three years the case may be treated as a civil dispute, said SEBI. Stock exchanges have been asked to retain residual amounts of defaulter members in case any litigation is pending against the member.
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