Small investors to get immediate monetary relief under streamlined grievance redressal mechanism
27 September 2013
With a view to streamlining the investor grievance redressal mechanism at stock exchanges and make it more effective, the Securities and Exchange Board of India (SEBI) has decided to give monetary relief to investors having claims up to Rs10 lakh, during the course of proceedings, from the Investor Protection Fund of Stock Exchange.
SEBI has also decided to empower the Investor Grievance Redressal Committee (IGRC) in the stock exchange to look into admissibility of claims in addition to conciliation process in order to shorten the time taken for these proceedings.
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 would block from the deposit of the concerned member.
The member will be given 7 days time from the date of signing of IGRC directions to inform the stock exchange whether the member intends to pursue the next level of resolution, ie, arbitration.
In case, the member does not opt for arbitration, the stock exchange will release the blocked amount to the investor after the 7 day deadline.
In case, the member opts for arbitration and the claim value admissible to the investor is not more than Rs10 lakh, the monetary relief from IPF would be given to the investor as mentioned below:
- Fifty per cent of the admissible claim value or Rs75,000, whichever is less, will be released to the investor from IPF of the stock exchange;
- In case the arbitration award is in favour of the investor and the member opts for appellate arbitration, then a positive difference of, 50 per cent of the amount mentioned in the arbitration award or Rs1.5 lakh, whichever is less and the amount already released to the investor will be released to the investor from IPF of the stock exchange;
- In case the appellate arbitration award is in favour of the investor 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 per cent of the amount determined in the appellate arbitration award or Rs2 lakh, whichever is less and the amount already released to the investor at clause will be released to the investor from IPF of the stock exchange.
In order to address the complaints regarding 'unauthorised trades', the stock exchanges 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 and the member would maintain a verifiable record of having made such margin calls and that the clients have not complied with the same.
Further, stock exchanges have been asked to set up facilitation desks at all investor service centres which would inter alia 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 Rs30,000 to Rs10,000, in case the party filing the appeal is a client having claim/counterclaim of up to Rs10 lakh.
Further expenses thus arising shall be borne by the Stock Exchanges and the Investor Protection Fund of Stock Exchanges equally.
SEBI has advised stock exchanges to make necessary amendments to the relevant bye-laws, rules and regulations for immediate implementation of the decision.