Investor Grievance Redressal System and Arbitration Mechanism amended:SEBI

1. The market regulator, Securities and Exchange Board of India (SEBI) has amended the Investor Grievance Redressal System and Arbitration Mechanism. The new framework will come into effect from January 1, 2022. The amendments aimed at further enhancing the effectiveness of investor grievance redressal and arbitration mechanism, have been taken after receiving feedback from the stock exchanges.

2. The SEBI said forming an exclusive panel for appellate arbitration is not required and members can serve on both the panels — arbitration and appellate arbitration. However, the exchanges will have to ensure that in the same matter, the members of the arbitration panel are not considered for constituting the appellate arbitration panel if the matter goes to appeal. Further, under the new framework, in case, the award amount is more than Rs. 50 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.

3. In case, the order is in favour of the client and the member opts for arbitration wherein the claim value admissible to the client is not more than Rs. 20 lakhs (Rs. Twenty lakhs), the following steps shall be undertaken by the Stock Exchange, in case the GRC order is in favour of the client, then 50% of the admissible claim value or Rs. 2.00 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, 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.

4. 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 shall be released to the client from IPF of the Stock Exchange. The 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 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 circular said.

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