The Securitkies & Exchange Board of India is mulling the transfer of money in the investor protection funds of various stock exchanges to the proposed investor education and protection fund (IEPF) that the market regulator proposes to set up. Unclaimed mutual fund dividends may also be transferred to the new investor protection fund.

The capital market regulator has been in talks with the finance ministry on the issue and may take the matter further at a meeting scheduled with ministry officials in the next couple of weeks. The announcement that Sebi was setting up its own IEPF was made by finance minister P. Chidambaram in his last Budget speech and was reiterated by Prime Minister Manmohan Singh in Mumbai, when he unveiled the regulator’s new headquarters on Friday.

Though there are 23 bourses in the country, the only really active ones are the Bombay Stock Exchange and the National Stock Exchange. The investor protection funds of these two, and other marginally active bourses, is collectively worth over Rs 500 crore. After the

Rs 120-crore payment crisis on the Calcutta SE in 2001, there has not been a single instance of an exchange tapping its IPF in the last five years.

An internal Sebi panel had earlier recommended absorbing the exchanges’ investor protection funds. However, this was strongly opposed by both the BSE and NSE.

Sebi is of the view that funds accumulated by exchanges from brokers by way of turnover charges, transaction charges and other levies have been inadequately used for investor education or protection.

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