Sebi revamps grievance redressal tool at bourses, depositories

The markets regulator Sebi today put in place a new set of norms to enhance the effectiveness of grievance redressal mechanism at stock exchanges and depositories.
The new norms include public dissemination of profiles of arbitrators, performance review of such arbitrators, three -stage fee structure for faster implementation of award and to discourage delayed filling of arbitrations by trading members.
The decision to revamp the grievance redressal mechanism at stock exchanges and depositories has been taken in consultation with all the stakeholders.
To enhance transparency and provide choice to parties, Sebi said exchanges and depositories will have to disseminate information like brief profile, qualification, areas of experience, number of arbitration matters handled and pre -arbitration experience of the arbitrators on their website.

Besides, market infrastructure institutions (MIIs)-- stock exchanges and depositories -- will have to create a common database of defaulting clients accessible to trading members and depository participants across stock exchanges and depositories, Sebi said in a circular.
The regulator said that there would be separate panels for arbitration and appellate arbitration. Further, for appellate arbitration, at least one member of the panel should be a retired judge. However, stock exchanges and depositories will have to obtain prior approval of Sebi's before empanelment.

Sebi said that investor service committee of the stock exchanges/depositories will review the performance of the arbitrators annually and submit the review report to the board of bourses/depositories.

The arbitrator fee will be upwardly revised to Rs 18,000 per case. Consequent to this upward revision, the additional expenses attributable to a client over and above the fee will be borne by the client and stock exchange or depository equally.
In case, award amount is more than Rs 50 lakh, the next level of proceedings can 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.
Besides, Sebi has put in place a three-stage fee structure in order to have faster implementation of award and to discourage delayed filling of arbitrations by trading members.

In case, the amount of claim is Rs 10 lakh, a fee of 1.3 per cent subject to a minimum of Rs 10,000 will be charged if claim is filed within 6-month from the date of dispute, it will rise to 3.9 per cent subject to a minimum of Rs 30,000 if the claim is filed after 6-month or after one month of the order passed by Investor Grievance Resolution Panel (IGRP), whichever is later.
After that time period, charges mentioned above as well as an additional fee of Rs 3,000 per month will be charged.