GUARANTEE FUND - Investor Compensation Fund

GUARANTEE FUND

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Operating in Greece since 1997.

INVESTORS PROTECTION

The Guarantee Fund shall compensate investors against money claims made for covered investment services.

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BACKGROUND

“Investment Guarantee Fund” with the distinctive title “Guarantee Fund” is an Investor-compensation Fund in line with Directive 97/7/EC, operating under provisions of Articles 1 and 61 – 78 in L. 2533/1997 (GG [FEK] 228/11.11.1997, issue Α’) transposing above Directive into the Greek laws

The Guarantee Fund was established pursuant to Legislative Decree 3078/11.10.1954 (GG [FEK] 245/11.10.1954, issue Α’) under the name “Joint Trading Transactions Guarantee Fund” with the purpose to secure trading transactions. Establishment of the Guarantee Fund had been considered an imperative in order to have stock exchange actors secured and had been provided for in the laws as early as 1919, and under the Explanatory Report of L.D. 3078/1954. Establishment of the Guarantee Fund was delayed as the prescribed Royal Decree granting power of legislative delegation was not issued.

Under provisions of Articles 94 – 117 paras. 1 and 3 in L. 4335/2015 (GG [FEK] 87/23.07.2015, issue Α’) transposing Directive 2014/59/EU, on the recovery and resolution of credit institutions and investment firms, the Guarantee Fund was designated as the Resolution Fund for Investment Services Firms.

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OBJECT

To uphold stability and reliability in the investment market.

The objects of the “Guarantee Fund” as set out in 63 of L. 2533/1997 are as follows:

a) to compensate clients in case of confirmed permanent or non-reversible failure of Investment Services Firms to fulfill its obligations arising out of the provision of covered investment services, and
b) to enable the Resolution Authority to use the Resolution function of Article 73Α on investment undertakings in order to ensure effective enforcement of resolution measures provided in for in the law transposing Directive 2014/59/EU.

The aim is to uphold stability and reliability in the investment market.

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STATUTORY BODIES

The Board of Directors of the Guarantee Fund is composed of seven members and its members are elected for three (3) years by the General Assemblies of the Guarantee Fund Members. Members can be redesignated or reelected without restrictions.

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COMPENSATIONS

The Guarantee Fund shall compensate investors against money claims made for covered investment services in case of confirmed permanent or non-reversible failure of an Investment Services Firm to fulfill its obligations arising out of covered investment services provided:

either to deliver back to clients / investors the financial instruments owned by same and which were held, managed and kept by the Investment Services Firm on their behalf,
or to give back the capital payable to those clients / investors.

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STRUCTURE AND OPERATIONS

Three main lines of information about the structure and the operation of the Guarantee Fund are presented below.

STATUTORY BODIES

Articles 68,69,70, law 2533/1997, define Management and Auditory Bodies of the Guarantee Fund.

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COMPENSATIONS

The object of the Guarantee Fund is the compensation of the investors and the contracting parties.

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MEMBERS

Sixty six (66) Members currently “participate” at the Guarantee Fund, divided in four (4) categories.

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FAQ

You may find the answers to some of the most frequently asked questions made by the investors below.

What is the Investor-compensation Fund (d. t. Guarantee Fund)?

The purpose of the “Investment Guarantee Fund” with the distinctive title “Guarantee Fund” is to compensate clients / investors of Investment Services Firms (“ΑΕΠΕΥ”). It operates under the provisions of L. 2533/1997, as in force, reflecting the harmonization of the Greek laws with the provisions in Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes.

Which claims are covered by the Guarantee Fund?

The Guarantee Fund shall cover investor claims arising out of transactions within or outside regulated markets relating to the covered principal and ancillary services provided by an Investment Services Firm under the authorization granted thereto by the Hellenic Capital Market Commission for financial instruments, as a result of the Firm’s failure confirmed by decision of the Hellenic Capital Market Commission and subsequent special clearing obligation process upon a court decision on bankruptcy a) to give back the capital payable to those investors or the capital owned by them and which are held by the Firm on their behalf, or b) to return financial instruments owned by them and which are held or managed on their behalf.
The Guarantee Fund shall cover client compensation arising out of investment services for financial instruments within the framework of cross-border Investment Services Firm activity by means of passport or establishment of a branch.

What is the object of the Guarantee Fund?

The objects of the Guarantee Fund are: a) to compensate clients in case of confirmed permanent or non-reversible failure of an Investment Services Firm to fulfill its obligations arising out of the provision of covered investment services, and b) to enable the Resolution Authority to use the Resolution function of Article 73Α on investment undertakings in order to ensure effective enforcement of resolution measures provided in for in the law transposing Directive 2014/59/EU. The aim is to uphold stability and reliability in the investment market.

When is an investor compensation process initiated?

The Guarantee Fund shall compensate clients / investors of an Investment Services Firm when such clients / investors are not fully satisfied due to failure confirmed by decision of the Hellenic Capital Market Commission and the firm becomes subject to special clearing obligation either by a court decision on bankruptcy in order a) to give back the capital payable to them or owned by them and which are held by the Firm on their behalf, or b) to return financial instruments owned by them and which are held or managed on their behalf.