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ISE
INVESTORS PROTECTION FUND REGULATIONS
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ISE INVESTORS PROTECTION FUND REGULATIONS
PREAMBLE
WHEREAS
the Management of Islamabad Stock Exchange considers that the
investors’ confidence in the fair dealings at the Exchange is the
key to rapid development of the market;
AND
WHEREAS to ensure effective risk management in secondary market
trading and to protect investors’ interest in the case of a
default by a member of the Exchange there is need to have
necessary regulations;
NOW,
THEREFORE, The Islamabad Stock Exchange (Guarantee) Limited in
exercise of the powers conferred by sub-section (1) of section 34
of the Securities and Exchange Ordinance, 1969 makes, with the
prior approval of the Federal Government, the following
regulations, namely: -
1. Short title and commencement
i. These
regulations may be called “ The ISE Investors Protection Fund
Regulations.”
ii. These regulations shall take effect upon
their publication in the official Gazette of Pakistan.
2. Definitions
In these
regulations, unless the subject or context otherwise requires: -
(a) “ Authority “ means the Corporate Law Authority;
(b) “ Board “ means the Board of Directors of the
Exchange;
(c) “ Exchange “ means the Islamabad Stock Exchange
(Guarantee) Limited;
(d) “ Fund “ means the ISE Investors Protection
Fund;
(e) “ Investors “ means a person, not being Member,
his agent or representative, who has purchased or sold any of the
securities listed at the Exchange;
3. Establishment of Fund
The fund
shall be established by the Board with contributions as follows: -
(a) There shall be an initial contribution of rupees
one million by the Exchange.
(b) 1/3rd or 33.33% of the clearing house
trading fee paid by the members of Exchange would be allocated to
the Fund every year until the total amount in the Fund is raised
to rupees 100/- million.
Provided
that on the direction of the Authority or through a Board
resolution, the Fund shall cease to exist upon the creation of a
national fund for the protection of investors through appropriate
legislation.
4. Eligibility of Claims
All
claims of an investor arising out of transactions entered into as
per Rules and Regulations of the Exchange and approved by the
Arbitration and Advisory Committee of the Exchange would be
eligible to be considered under these regulations.
5. Procedure for Settlement of Claims
In the
event of default of a Member, in addition to any surplus after
distribution of losses as per Members’ Default and Procedure for
Recovery of Losses Regulations 1996 of the Exchange, an amount may
be set aside out of the Fund to satisfy the claims of investors
against that defaulting Member in the manner provided hereunder:
In case
the eligible claims of investors determined against the defaulting
member exceed the amount available for settlement of such claims
of investors and the claims are to be satisfied on prorata basis,
a contribution shall be made out of the Fund in accordance with
the following allocations:
Prorate Distribution
Contribution Amount
Above 40%
& Upto 50% Rs. 250,000/-
Above 30%
& Upto 40% Rs. 500,000/-
Above 20%
& Upto 30% Rs. 750,000/-
Below
20%
Rs.1,000,000/-
Provided
that no allocation shall be made out of the Fund in case the
amount available for settlement is more than 50% of eligible
claims of the investors determined against the defaulting member.
Provided
further that the Board may alter any of the above slabs or
allocate the contribution amount in its sole discretion if need so
arises.
6. Management of the Fund
The
Management of the Fund shall vest in the Board who may regulate
the same through a Committee to be constituted under these
regulations to process the claims and their settlements. The
Committee shall include two outside directors who shall not be
members of the Exchange.
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