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Market Intelligence › Basic Terminologies
The scope of the IPF, and which losses it does not cover
Published by The Retail Trader · AUG 10, 2026 · Compliance & Regulation
When a broker defaults, a safety net exists. It is a fund held by the exchange, and understanding its scope matters — because it is not for every loss.
The investor protection fund comes into play when a broker is declared a defaulter and cannot settle clients' legitimate claims.
Every exchange has its own rules and per-client compensation limits, and there is a defined process and timeline for making a claim.
Understanding this limit is the most important part:
• Trading losses are not covered — that is your own decision.
• Dealings with an unregistered entity are not covered.
• Money given in the broker's name into a third-party scheme is not covered.
• A claim has its own time limit — if you delay, it closes.
The best protection is paperwork, not the fund. Keeping holdings in demat, checking the ledger regularly and not leaving too much idle cash with the broker — together, the three reduce the chance of that situation in the first place.
This article is for education only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics change from time to time with the exchange, SEBI and RBI, so verify every number yourself with your broker or an official source.