The government has approved the rules to set up and operate a centralised customer protection compensation fund by the securities exchanges for customers, a statement said on Tuesday. The statement said the federal government approved the draft Customers Compensation Fund (Establishment and Operation) Rules, 2016, framed under the Securities Act, 2015. The Securities and Exchange Commission of Pakistan (SECP) also drafted the ‘Centralized Customer Protection Compensation Fund Regulations, 2016’, to give effect to the rules.
The draft regulations and rules have been notified in the official gazette, and have also been placed on the SECP’s to seek public comments thereon latest by June 21 and July 6, respectively. “These draft rules and regulations have been framed to provide for the establishment and operation of a centralized customer protection compensation fund by the securities exchanges for customers of securities brokers,” the statement said. “The fund shall be established as a trust to compensate customers of defaulter brokers. This arrangement shall ensure that assets of the fund are kept segregated from assets of the securities exchanges. In order to keep the fund at sustainable levels the sources of contributions to the fund have been identified along with the manner of utilisation of the fund in cases of defaults.”
The SECP said the framework envisages the fund to be administered by trustees, “who are fit and proper to ensure that only capable individuals manage the fund.” “The rules have been framed after detailed study of international best practices and IOSCO (International Organization of Securities Commissions) principles for investor protection,” it said.
Source: The News: Rules for shareholders’ protection fund approved
