ISLAMABAD: The federal government has approved the draft Customers Compensation Fund (Establishment and Operation) Rules, 2016, framed under the Securities Act, 2015.
Furthermore, the Securities and Exchange Commission of Pakistan has also drafted Centralized Customer Protection Compensation Fund Regulations, 2016, to give effect to the rules, said a statement issued by the commission.
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, 2016, and July 6, 2016, 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 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 utilization of the fund in cases of defaults.
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 principles for investor protection.
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