BOTSWANA STOCK EXCHANGE (BSE) INVESTOR COMPENSATION FUND
1. WHAT IS AN INVESTOR COMPENSATION FUND?
A Compensation Fund in relation to financial markets, is a rescue fund established to grant investors’ compensation for financial losses suffered as a result of a Participant’s failing to meet their contractual obligations.
2. WHAT IS THE PURPOSE OF THE INVESTOR COMPENSATION FUND?
To grant compensation to clients for losses suffered as a result of nonfulfilment of contractual obligations due to dishonesty, insolvency, default, or liquidation of a Participant; To protect securities investors’ investment interests. To ensure financial integrity in the securities market in Botswana. To enhance investors’ confidence in the securities market of Botswana.
3. WHAT IS THE SCOPE OF INVESTOR COMPENSATION FUND?
The Investor Compensation Fund covers transactions and dealings of securities traded on the BSE. Where a claimant suffers loss arising from a contractual or statutory obligation placed on any other participant besides a Member as defined under the Rules.
NB: The Investor Compensation Fund DOES NOT COVER default obligations, shortfalls, deficiencies and or any other defaults during clearing and settlement of trade transactions by CSDB. This type of protection is provided for by the Settlement Guarantee Fund Rules.
4. WHO IS ELIGIBLE TO CLAIM FROM THE INVESTOR COMPENSATION FUND?
All securities’ investors, with eligible claims in terms of the Rules, excluding institutional investors, who have suffered loss as a result of a Participant’s failure to meet their contractual obligations.
5. WHAT IS A LEGITIMATE CLAIM?
A Claim that proves:
◦ that the claimant has suffered loss and the loss was a direct result of malpractice, negligence, error, on the part of the Participant; o that the claimant has suffered loss and the loss was a direct result of insolvency on the part of the Participant;
◦ that the claimant gave money or property or authority to a Participant or a person who the claimant believed was a Participant or acting on behalf of the Participant;
◦ Proof that the money or property or authority was given to the Participant in connection with effecting a transaction covered by the provisions of the Members Rules, the Equity Listings Requirements, Automated Trading System Debt Trading Requirements and other applicable Rules and Requirements relating to transactions effected through the Exchange.
6. HOW TO MAKE A CLAIM FROM THE INVESTOR COMPENSATION FUND
Make an application addressed to the Chief Executive Officer of the BSE through the prescribed application form within 3 years from the date of default. Ensure the application contains the following:
◦ the names of the parties involved;
◦ addresses of the parties involved;
◦ the details of the transaction If an investor is successful, their claim will be paid within 6 months from the date of application.
7. WHAT ARE THE GROUNDS FOR REJECTING A CLAIM?
If the investor has contributed in any way to the financial difficulties of the Participant in default; If the application is found to contain any inaccuracy or omission, unless this is clearly immaterial or is shown by the investor to be wholly innocent; or Where the investor has so conducted himself in his dealings with a Participant in default, as to be in breach of applicable law or regulations, including these Rules.