Amendment to SEBI Circulars pertaining to Investor Grievance Redressal System and Arbitration Mechanism
Summary
This circular amends SEBI regulations regarding the Investor Grievance Redressal System and Arbitration Mechanism for commodity derivatives segments. It clarifies arbitrator panel segregation rules, updates thresholds for interim relief payments from Investor Protection Funds, and introduces fees for late grievance filings. The amended provisions become effective on January 1, 2022, requiring stock exchanges to update their bye-laws.
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Forming of exclusive panel for appellate arbitration is not required and members can serve on both the panels. However, it is imperative for the exchanges to ensure that in the same matter, the members of arbitration panel are not considered for constituting the appellate arbitration panel if the matter goes to appeal.
In case, the award amount is more than Rs. 50 lakhs (Rs. Fifty lakhs), the next level of proceedings (arbitration or appellate arbitration) may take place at the nearest metro city, if so desired by any of the parties involved. The additional statutory cost for arbitration, if any, shall be borne by the party desirous of shifting the place of arbitration.
In case the GRC order is in favour of the client, then 50% of the admissible claim value or Rs. 2.00 lakhs (Rs. Two lakhs), whichever is less, shall 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% of the amount mentioned in the arbitration award or Rs. 3.00 lakhs (Rs. Three lakhs), whichever is less, and the amount already released to the client at clause (a) above, shall be released to the client from IPF of the Stock Exchange.
In case the appellate arbitration award is in favour of the client and the member opts for making an application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the appellate arbitration award, then a positive difference of, 75% of the amount mentioned in the appellate arbitration award or Rs. 5.00 lakhs (Rs. Five Lakhs), whichever is less, and the amount already released to the client at clause (a) and (b) above, shall be released to the client from IPF of the Stock Exchange.
Total amount released to the client through the facility of interim relief from IPF in terms of this Circular shall not exceed Rs. 10.00 lakhs (Ten lakhs) in a financial year.
The additional fees charged from the trading members, if the claim is filed beyond the prescribed timeline, if any, to be deposited in the IPF of the respective Stock Exchange.
The provisions of this circular shall come into effect from January 1, 2022.
Make necessary amendments to the relevant bye-laws, rules and regulations.
Communicate to SEBI, the status of the implementation of the provisions of this circular through the Monthly Development Report (MDR).
This Circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Section 9(2)(n) and Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. All other provisions of the relevant circulars will continue to be in force.
Source: SecMarx — Amendment to SEBI Circulars pertaining to Investor Grievance Redressal System and Arbitration Mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.