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With the Investor Protection Fund (IPF) of commodity exchanges functioning smoothly, the Forward Markets Commission (FMC) has decided not to nominate its official as trustee to the IPF.
An IPF, registered as a trust, is created to protect the interests of clients of trading members of an exchange who may have been declared defaulters or expelled under the provisions of the bourse.
"Now, over the years the IPF has been functioning smoothly. It is therefore felt that nomination of an official of FMC as a trustee in IPF is no longer required. Therefore, the Commission has decided to amend the guidelines," commodity markets regulator FMC said in a recent circular.
As per the amended guidelines, the IPF trust would consist of two eminent persons, one independent Director on the Board of the exchange and the exchange Managing Director and CEO.
The names of eminent persons and an independent Director will be suggested by the exchanges and approved by the regulator.
The FMC has made further amendment to delete the requirement of IPF Trust Deed.
The exchanges have been asked to take note of the amendments and accordingly make the necessary changes in rules, regulations and bye-laws of the exchange.
The IPF was constituted to protect investors' funds from default risk of members of the exchanges as investors play a very useful role in commodity derivative market and their interest needs to be protected, said the FMC circular.
Currently, there are four national and six regional level exchanges in the country.
