An individual investor has been allowed to claim up to Tk 0.5 million as compensation from the Investors' Protection Fund (IPF) if his stockbroker becomes defaulter with securities and money, officials said.
The compensation facility for the clients of defaulting stock brokers has come following the regulatory approval of amendment of the Dhaka Stock Exchange (Investors' Protection Fund) Regulations, 2014.
To make the IPF more time-befitting, the securities regulator raised the volume of support to Tk 0.5 million for an individual claimant from previous amount of Tk 25,000 only along with bringing other necessary changes in regulations.
The compensation limit against a single claim can be increased as per consultation with the board of the exchange or approval of the commission. Â
The Dhaka Stock Exchange (DSE) last week got the IPF's complete regulations approved by the Bangladesh Securities and Exchange Commission (BSEC).
"The purpose of the IPF created under the regulations is to protect the interest of the investors in case of unsettled dues owed by a TREC (Trading Rights Entitlement Certificate) holder to its clients," said the regulations of the IPF.
The clients will lodge claims for payments if a TREC holder is declared defaulter by the exchange.
And the clients' compensation claims lodged as per the regulations will have to be settled within 90 days from the date of receiving the complaint.
According to revised regulations, the IPF shall be vested in and managed by a 5-member Trustee Board approved by the commission of the securities regulator.
The members of the trustee board will enjoy a reasonable honorarium.
DSE Managing Director Dr. Swapan Kumar Bala said the funds, which have been collected so far for IPF, are above Tk 62.1 million.
"The size of the fund will be increased day by day based on contribution of the relevant sectors," Mr. Bala said.
He said the Dhaka Stock Exchange (Investors' Protection Fund) Regulations, 2014 will come into effect after publication of its gazette notification.
The fund will continue to be 'irrevocable' and the Trustee Board shall have the full control over the administration and management of the IPF.
The fund will consist of contributions of the Exchange and its TREC holders.
"The board of the IPF shall invest the fund in such a manner as may be authorised by the law for the time being in force without investing in the capital market," the regulations read.
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