SEBI amends investment grievance redressal system and arbitration mechanism.


The Securities and Exchange Board of India on 22nd October 2021 has amended the framework for investor grievance redressal system and arbitration mechanism at stock exchanges. 

In order to further enhance  the  effectiveness  of  Investor Grievance Redressal System  and  Arbitration Mechanism at the Stock  Exchanges,  based on the  internal deliberations/discussions, and  the  feedback  received  from  the  Stock Exchanges, it has been decided to add/modify certain provisions.

Under the revised framework, SEBI has clarified that 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.

Further as per clause 2. A(viii) deals with the place of arbitration in which if 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.”

In respect of threshold limit for interim relief paid out of the Investors Protection Fund (IPF) in stock exchanges, Sebi has laid out a procedure that needs to be undertaken by the bourses in case the order is in favour of a client and the member opts for arbitration wherein the claim value admissible to the client is not over ₹20 lakh.   

The revised framework shall be applicable from 1st January 2022.



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