Regulatory body SEBI contemplates unification of investor protection funds for stocks and commodities.

Published on September 8, 2025

The Securities and Exchange Board of India (SEBI) has announced plans to merge the Investor Protection Funds (IPFs) for the equity and commodity segments into a single trust, known as the Exchange Investor Protection Fund Trust. This move is intended to streamline compliance, strengthen investor safeguards, and improve operational and cost efficiency.

Since the merger of the Forward Markets Commission into SEBI in 2015, equity and commodity markets have been regulated by a single entity. The new unified trust is expected to cover investor protection across all market segments.

Currently, exchanges such as the Bombay Stock Exchange (BSE) maintain separate trusts for managing the two funds. However, most brokers today are members across both equity and commodity segments, while exchanges themselves are structured as unified entities housing multiple products. The merger will enable a single governance framework for improved monitoring, audit controls, and risk management.

The unified trust will replace the existing two funds: one for equity and related products, and another, the Commodity Investor Protection Fund (CIPF), for commodities. This merger will ensure consistency in compensation policies and potentially benefit commodity investors more, as compensation limits in commodities have been lower than in equities.

If the two funds are merged, any claims arising from clients of members who have defaulted in the commodity segment would be compensated from the single IPF with the exchanges. Under a merged trust, payouts are likely to be aligned across both equity and commodity segments.

The merger will also reduce compliance costs and administrative effort. The Financial Supervisory Commission (FSC) announced amendments to the Securities Investor and Futures Trader Protection Act effective July 16, 2025, which include measures to expand funding resources for the Investor Protection Center by consolidating funds such as accumulated surplus interest income. This implies a functional merging of protection fund resources for operational efficiency in investor protection, including equity and commodity segments.

The source from an exchange stated that this is a logical step since equity and commodity segments already operate under one regulatory roof. An email sent to SEBI for comments did not elicit a response. The market regulator is expected to issue a consultation paper proposing the merger of the IPFs for equity and commodity segments.

The merger of the funds is expected to bring about significant improvements in the overall protection and security of investors in both the equity and commodity markets. As more details emerge, this development is likely to be closely watched by investors, brokers, and market participants.

Regulatory body SEBI contemplates unification of investor protection funds for stocks and commodities.