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Sebi plans to introduce framework to compensate investors for technical glitches

  • “Sebi is actively contemplating a proposal to introduce a framework for ascertaining the incidents of technical glitches the place compensation must be paid to the traders and to plot a strategy and calculation of compensation,” in response to the regulator’s annual report for 2019-20.

PTI, New Delhi

PUBLISHED ON FEB 10, 2021 05:45 PM IST

Markets regulator Sebi is contemplating a proposal to introduce a framework to determine the incidents of technical glitches whereby compensation could be given to traders.

Apart from, the regulator can be trying to devise a strategy and calculation of compensation.

Additional, to enhance the efficacy of liquidity enhancement measures equivalent to market making, Liquidity Enhancement Scheme (LES) and name public sale mechanism for illiquid securities, Sebi would evaluate the prevailing framework.

“Sebi is actively contemplating a proposal to introduce a framework for ascertaining the incidents of technical glitches the place compensation must be paid to the traders and to plot a strategy and calculation of compensation,” in response to the regulator’s annual report for 2019-20.

The regulator can be contemplating a proposal to determine the optimum corpus for the Investor Safety Fund (IPF) of the inventory exchanges on the premise of rigorous stress testing, to make sure that the respectable claims of the shoppers of the defaulting members or brokers even in excessive occasions are met.

The regulator would additionally evaluate the quantum of Settlement Assure Fund (SGF) of the Clearing Companies based mostly on the stress take a look at, to extend the resilience of the markets to potential dangers posed by excessive volatility.

Additional, a well-documented framework on the depository degree for orderly winding down of the depositories operations is being developed in accordance with tips specified by Sebi.

Regarding market infrastructure establishments (MIIs), Sebi mentioned such establishments rely closely on know-how for his or her numerous actions associated to buying and selling, clearing and settlement and so on. Thus, it’s pertinent to present extra give attention to system or know-how through the inspection of MIIs.

“It’s proposed to construct an inspection guide that can be utilized as a single supply of reference for conducting the inspections of MII. It is usually proposed to construct processes that may be automated and help in a radical inspection of the MIIs,” Sebi mentioned.

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