Sebi tweaks investor grievance redressal mechanism framework



Capital regulator on Friday tweaked the framework on investor grievance redressal mechanism after receiving representation from stock exchanges.


The regulator has modified framework pertaining to speeding up grievance redressal mechanism and threshold limit for interim relief paid out of investor protection fund (IPF) of the stock exchange among others.





With regard to place of arbitration or appellate arbitration in case award amount is more than Rs 50 lakh, said the next level of proceedings may take place at the nearest metro city, if desired by any of the party involved.


The additional statutory cost for arbitration, if any, will be borne by party desirous of shifting the place of arbitration, the Securities and Exchange Board of India (Sebi) said in a circular.


In all cases except the additional fees charged from the trading members, if the claim is filed beyond the prescribed timeline (only for member) on issue of the arbitral award then the stock exchange will refund the deposit to the party in whose favour the award has been passed.


The additional fees charged from the trading members, if the claim is filed beyond the timeline prescribed, will be deposited in the IPF of the respective stock exchange.


The stock exchanges will have to ensure that once a member has been declared defaulter, the claim will be placed before the Member Core Settlement Guarantee Fund Committee (MCSGFC, the erstwhile defaulters’ committee) for sanction and ratification.


The committee’s advice with respect to legitimate claims will be sent to the IPF trust for disbursement of the amount immediately.


“In case the claim amount is more than the coverage limit under IPF or the amount sanctioned and ratified by the MCSGFC is less than the claim amount then the investor will be at liberty to prefer for arbitration outside the exchange mechanism / any other legal forum outside the exchange mechanism for claim of the balance amount,” said.


In case, order is in favour of client and the member opts for arbitration wherein the claim value admissible to the client is not more than Rs 20 lakh, Sebi has prescribed steps that should be undertaken by the stock exchange under certain scenario.


In case the grievance redressal committee’s order is in favour of the client then 50 per cent of the admissible claim value or Rs 2 lakh, whichever is less, should be released to the client from IPF of the stock exchange.


In case the arbitration award is in favour of the client and the member opts for appellate arbitration then a positive difference of, 50 per cent of the amount mentioned in the arbitration award or Rs 3 lakh whichever is less, and the amount already released to the client as mentioned above, will be released to the client from IPF of the exchange.


In case the appellate arbitration award is in favour of the client and the member opts for making an application under Arbitration and Conciliation Act, to set aside the appellate arbitration award, then , 75 per cent of the amount mentioned in the appellate arbitration award or Rs 5 lakh, whichever is less and the amount already released to the client under the above mentioned two clauses will be released to the client.


Total amount released to the client through the facility of interim relief from IPF should not exceed Rs 10 lakh in a financial year, Sebi said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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