Amendment to Investor Grievance Redressal System and Arbitration Mechanism

CIR/CDMRD/DEICE/CIR/P/2017/77 · 2017-07-11 · SEBI Commodity Derivatives Market Regulation Department

Summary

This circular amends the Investor Grievance Redressal System and Arbitration Mechanism for National Commodity Derivatives Exchanges. It mandates specific operational changes including arbitrator profile dissemination, soft copy document submission, and annual performance reviews. The document also establishes revised fee structures, interim relief thresholds from the Investor Protection Fund, and protocols for award implementation. This section establishes a cumulative annual cap of Rs. 10 lakhs on interim relief releases from the Investor Protection Fund. It defines the composition, functions, and membership rules for the Disciplinary Action Committee, Defaulters’ Committee, and Investors Service Committee. The Arbitration Committee is discontinued, and exchanges are directed to amend bye-laws and implement these provisions immediately.

Text

SEBI mandated Investor Grievance Redressal System and Arbitration Mechanism to National Commodity Derivatives Exchanges with effect from April 01, 2016.

Exchanges shall disseminate information w.r.t. brief profile, qualification, areas of experience/expertise, number of arbitration matters handled, pre-arbitration experience, etc. of the arbitrators on their website.

Exchanges shall make necessary arrangements in terms of hardware viz., computer, scanner, printer, etc. and required software’s at exchange offices/Investor Service Centers (ISCs) to facilitate the clients to type/ convert their documents into electronic format/ soft copy.

Investor Service Committee of the Exchanges shall review the performance of the arbitrators annually and submit the review report to the Board of the Exchange. Training need of the arbitrators will be catered by National Institute of Securities Markets (NISM).

Exchanges shall create a common database of defaulting clients accessible to members across the Exchanges.

There shall be separate panels for arbitration and appellate arbitration. Further, for appellate arbitration, at least one member of the panel shall be a Retired Judge. Exchanges shall obtain prior approval of SEBI before empanelment of arbitrators/appellate arbitrators.

Exchanges shall empanel IGRP members, however, no arbitrator/appellate arbitrator shall be empaneled as IGRP member.

The arbitrator fee shall be upwardly revised to Rs.18,000/- (Rs. Eighteen thousand) per case. Consequent to this upward revision, the additional expenses attributable to a client over and above the fee structure as specified in point x, shall be borne by the client (wherever applicable) and Exchange equally.

In case award amount is more than Rs. 50 lakh (Rs. Fifty lakh), the next level of proceedings (arbitration or appellate arbitration) may take place at the nearest metro city, if desired by any of the party involved. The additional cost for arbitration, if any, to be borne by the appealing party.

In order to safeguard the interest of the parties involved in arbitration and to ensure speedy implementation of the arbitration award, the rate of interest on the award passed by arbitrators shall be in compliance with Arbitration and Conciliation (Amendment) Act, 2015.

The fee structure (exclusive of statutory dues - stamp duty, service tax, etc.) for filing arbitration reference shall be as follows: ≤ 10,00,000 claim: 1.3% subject to minimum of Rs.10,000; > 10,00,000 - 25,00,000 claim: Rs. 13,000 plus 0.3% amount above Rs. 10 lakh; > 25,00,000 claim: Rs. 17,500 plus 0.2 % amount above Rs. 25 lakh subject to maximum of Rs. 30,000.

The filing fee will be utilized to meet the fee payable to the arbitrators. Excess of filing fee over fee payable to the arbitrator, if any, to be deposited in the IPF of the respective exchange.

Source: SecMarx — Amendment to Investor Grievance Redressal System and Arbitration Mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.