Sebi plans to introduce framework to compensate investors

New Delhi: Markets regulator Sebi is considering a proposal to introduce a framework to ascertain the incidents of technical glitches whereby compensation would be given to investors.

Besides, the regulator is also looking to devise a methodology and calculation of compensation.

Further, to improve the efficacy of liquidity enhancement measures such as market making, Liquidity Enhancement Scheme (LES) and call auction mechanism for illiquid securities, Sebi would review the existing framework.

“Sebi is actively considering a proposal to introduce a framework for ascertaining the incidents of technical glitches where compensation needs to be paid to the investors and to devise a methodology and calculation of compensation,” according to the regulator’s annual report for 2019-20.

The regulator is also considering a proposal to ascertain the optimum corpus for the Investor Protection Fund (IPF) of the stock exchanges on the basis of rigorous stress testing, to ensure that the legitimate claims of the clients of the defaulting members or brokers even in extreme times are met.