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SEBI asks bourses to have stronger investor redressal system

By Super
SEBI asks bourses to have stronger investor redressal system
Mumbai: Market regulator SEBI Thursday asked stock exchanges to put in place a stronger and more effective system for faster resolution of investor grievances and to provide for immediate grant of monetary relief to investors after arbitration procedures.

The Securities and Exchange Board of India (SEBI) has decided to give monetary relief to investors having claims upto Rs 10 lakh, during the course of proceedings from the Investor Protection Fund (IPF) of stock exchange.

Further, SEBI has decided to shorten the time taken for these proceedings.

The regulator has put in these guidelines with an aim to streamline the investor grievance redressal mechanism at stock exchanges and make it more effective from the angle of investor protection.

In a circular issued today, SEBI is planning to empower Investor Grievance Redressal Committee (IGRC) in the stock exchanges to look into admissibility of claims in addition to conciliation process.

"As such, if the complaint is not resolved through conciliation process, IGRC, on conclusion of the proceedings may ascertain the claim amount admissible to the investor, which the stock exchange shall block from the deposit of the concerned member," SEBI said.

The stock exchange are required to give a time of seven days to the member from the date of signing of IGRC directions, to inform bourses whether the trading member intends to pursue the next level of resolution--arbitration.

In case, the member does not opt for arbitration, the stock exchange are required to release the blocked amount to the investor after seven days.

In order to address the complaints regarding 'unauthorised trades', bourses have been advised to ensure that the contract note issued by member for transactions owing to non-compliance of margin calls would bear a remark specifying the same.

Besides, the member would maintain a record of having made such margin calls and that the clients have not complied with the same.


As part of the SEBI-led effort to facilitate investors to file grievances and arbitration cases close to the place of origin, the regulator asked stock exchanges to set up facilitation desks at all investor service centres.

The move would also assist investors in obtaining documents/details from stock exchanges wherever so required for making application to IGRC and filing arbitration.

Further, to lessen the burden of such investors, the amount payable by the investor for appellate arbitration has been reduced from Rs 30,000 to Rs 10,000.

In case, a trading member opts for arbitration and the claim value admissible to the investor is not more than Rs 10 lakh, the monetary relief of 50 percent of the admissible claim value or Rs 0.75 lakh, whichever is less, would be released to the investor from IPF of the stock exchange.

SEBI said that if the arbitration award goes in favour of the investor and the member opts for appellate arbitration, then a positive difference of 50 percent of the amount mentioned in the arbitration award or Rs 1.5 lakh whichever is less, would be released to investor.

In addition, the investor would also be entitled for a the monetary relief of 50 percent of the admissible claim value (Rs 10 lakh) or Rs 0.75 lakh.

If the appellate arbitration award is in favour of the investor and the member opts for making an application to set aside the appellate arbitration award, then a positive difference of 75 percent of the amount determined in the appellate arbitration award or Rs 2 lakh whichever is less and the sum already released to the investor in the above two categories, shall be given.

Investor Grievance Redressal Committee (IGRC) comprise independent persons with law, finance, accounts, economics, management or administration qualifications and experience in financial services.


Story first published: Friday, September 27, 2013, 10:00 [IST]
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