NSE Investor Protection: IPFT and Core SGF Explained
NSE's Investor Protection Fund Trust (IPFT) and Core Settlement Guarantee Fund (Core SGF) address different consequences of member defaults. The IPFT can compensate admitted investor claims within its rules, while the Core SGF supports settlement obligations when a clearing member defaults, according to NSE's September 10, 2026 red herring prospectus.
The distinction matters for anyone asking what happens if a broker fails. The RHP describes a maximum IPFT compensation amount of ₹35 lakh per investor per defaulting or expelled member. That is a conditional claim limit, rather than an assurance that every market loss is covered.
What does NSE's Investor Protection Fund Trust cover?
The IPFT is intended to compensate investors where the assets of a defaulting or expelled trading member are insufficient to meet admitted claims. It also supports investor education, awareness and research.
The RHP's risk disclosure on page 52 specifies compensation up to ₹3.50 million, equivalent to ₹35 lakh, per investor per defaulter or expelled member. The words describing eligibility and the unit of the limit are important: this is not an unrestricted payment available for any loss involving an investment account.
A decline in a security's market price is different from an admitted claim arising from a member default. The fund's disclosed purpose should not be interpreted as a guarantee against the normal gains and losses of investing.
How large are the two funds?
The RHP reports the following consolidated balances as of June 30, 2026. The figures use crore rupees and are rounded to two decimals.
These balances are not interchangeable pools. Combining them into a single amount of direct compensation available to individual investors would misstate their separate purposes.
The Core SGF figure is the consolidated disclosure. It should not be mixed with a standalone clearing subsidiary balance without identifying the different reporting scope.
How does the Core SGF support settlement?
NSE's clearing entities maintain segment-specific Core SGFs. Their purpose is to make resources available to meet settlement obligations if a clearing member fails to honour its commitments.
The RHP describes daily stress tests used to determine the required fund corpus. It also describes margins, collateral and other risk controls that operate before a default reaches the stage of drawing on the guarantee fund.
In the disclosed default waterfall, resources are used in a prescribed sequence. This generally begins with the defaulting member's money, followed by insurance where applicable, clearing corporation resources, the Core SGF and further resources specified in the framework. The arrangement also provides for capped contributions from non-defaulting members and payout haircuts as a last resort.
The structure therefore involves several layers of resources. The Core SGF is one part of that arrangement, and segment ring-fencing is intended to contain the effects of defaults across markets.
What do NSE's investor claim figures show?
The IPFT reported claim expenditure of ₹22.07 crore in FY2026, compared with ₹30.31 crore in FY2025 and ₹52.77 crore in FY2024. The RHP recorded 3,392 claims in FY2026, against 4,671 and 6,851 in the preceding two years.
These figures describe historical claim expenditure and counts. They do not establish the compensation payable in a particular new case, which depends on the relevant claim and fund rules.
They also should not be treated as a measure of all losses experienced by NSE investors. The disclosed claims relate to the fund's member-default compensation function.
Do the balances eliminate default risk?
NSE's RHP expressly states that the funds might be insufficient to meet all claims or obligations in adverse default circumstances. It also notes that additional contribution requirements could affect the company's profits and distributable reserves.
The two funds provide different forms of protection within the market's operating framework. The IPFT addresses eligible investor claims, while the Core SGF supports the completion of settlement. Their significance lies in those defined functions, the available resources and the applicable conditions, rather than a blanket promise that every loss will be reimbursed.