INVESTOR GRIEVANCE REDRESSAL MECHANISM
CIRCULAR NO. MRD/ICC/30/2013, DATED 26-9-2013
| (a) | | Stock Exchanges shall ensure that all complaints are resolved at their end within 15 days as mentioned in the circular no. MRD/ICC/16/2012 dated June 15, 2012.
The correspondence with the Member & investor (who is client of a
Member) may be done on email if the email id of the investor is
available in the UCC database. The Member (Stock Broker, Trading Member
and Clearing Member) shall provide a dedicated email id to the stock
exchange for this purpose. |
| (b) | | In
case the matter does not get resolved, conciliation process of the
exchange would start immediately after the time lines stated in sub-para
(a) above. |
| (c) | | Investor Grievance Redressal Committee (IGRC) shall be allowed a time of 15 days to amicably resolve the investor complaint. |
| (d) | | IGRC
shall adopt a two-fold approach i.e. for proceedings leading to
direction to the Member to render required service in case of service
related complaints and proceedings leading to an order concluding
admissibility of the complaint or otherwise in case of trade related
complaints. |
| (e) | | In
case the matter is not resolved through the conciliation process, IGRC
would ascertain the claim value admissible to the investor. |
| (f) | | Upon
conclusion of the proceedings of IGRC, i.e. in case claim is admissible
to the investor, Stock Exchanges shall block the admissible claim value
from the deposit of the Member. |
| (g) | | The
Stock Exchange shall give a time of 7 days to the Member from the date
of signing of IGRC directions as mentioned under sub-para (d) above to
inform the Stock Exchange whether the Member intends to pursue the next
level of resolution ie. Arbitration. |
| (h) | | In
case, the Member does not opt for arbitration, the Stock Exchange
shall, release the blocked amount to the investor after the
aforementioned 7 days. |
| (i) | | In
case, the Member opts for arbitration and the claim value admissible to
the investor is not more than Rs. 10 lac, the following shall be
undertaken by the Stock Exchange |
| i. | | 50%
of the admissible claim value or Rs. 0.75 lac, whichever is less, shall
be released to the investor from IPF of the Stock Exchange. |
| ii. | | In
case the arbitration award is in favour of the investor and the Member
opts for appellate arbitration then a positive difference of, 50% of the
amount mentioned in the arbitration award or Rs. 1.5 lac, whichever is
less and the amount already released to the investor at clause (i)
above, shall be released to the investor from IPF of the Stock Exchange. |
| iii. | | 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% of the amount
determined in the appellate arbitration award or Rs. 2 lac, whichever is
less and the amount already released to the investor at clause (i) and
(ii) above, shall be released to the investor from IPF of the Stock
Exchange. |
| iv. | | Before
release of the said amounts from the IPF to the investor, the Stock
Exchange shall obtain appropriate undertaking/ indemnity from the
investor against the release of the amount from IPF, to ensure return of
the amount so released to the investor, in case the proceedings are
decided against the investor. |
| v. | | If
it is observed that there is an attempt by investor/client either
individually or through collusion with Member(s) or with any other
stakeholders, to misuse the provision of this Circular, then without
prejudice to the powers of the Board to take action, appropriate action
in this regard shall be taken against any such person, by the Stock
Exchange, including disqualification of the person so involved from
henceforth accessing the benefits of this Circular. |
| vi. | | In
case the complaint is decided in favour of the investor after
conclusion of the proceedings, then amount released to the investor
shall be returned to IPF from the blocked amount of the Member by the
Stock Exchange and the rest shall be paid to the investor. |
| vii. | | Total
amount released to the investor through the facility of monetary relief
from IPF in terms of this Circular shall not exceed Rs. 5 lac in one
financial year. |
| viii. | | Stock
Exchanges may devise a detailed procedure with regard to release of
funds from IPF and recovery thereof and necessary formats of
documentation. |
| ix. | | In
case the investor loses at any stage of the proceedings and decides not
to pursue further, then the investor shall refund the amount released
from IPF, back to the IPF. In case the investor fails to make good the
amount released out of IPF then investor (based on PAN of the investor)
shall not be allowed to trade on any of the Stock Exchanges till such
time the investor refunds the amount to IPF. Further, the securities
lying in the demat account(s) of the investor shall be frozen till such
time as the investor refunds the amount to the IPF. |
| x. | | The Stock Exchanges may also resort to displaying the names of such investors on their websites if considered necessary. |
| (3) | | With a view to rationalise the timelines involved in the arbitration mechanism, Stock Exchanges are advised as under: |
| (a) | | As
per clause 6.2 of circular no. CIR/MRD/DSA/24/2010 dated August 11,
2010 the Members are required to file application for appellate
arbitration within one month of the date of receipt of arbitral award.
Further as per section 34 (3) of the Arbitration and Conciliation Act,
1996 the Members have three months to make an application to set aside
an arbitral award. In this regard, the Members shall convey their
intention to Stock Exchanges within 7 days of receipt of the award, as
regards whether such Members desire to challenge the arbitration
award/appellate arbitration award in Court or not. |
| (b) | | If
the Members do not express their intent to challenge the arbitration
award/appellate arbitration award then it would be presumed that Members
does not intend to challenge the award and the Stock Exchange shall
take further steps accordingly. |
| | In addition to the above, the stock exchanges shall also take the below mentioned steps: |
| (4) | | With
a view to address complaints regarding 'unauthorised trades' Stock
Exchanges are advised to direct the Members to put in place the
following: |
| (a) | | In
case the Member has made margin calls to the client and the client has
failed to comply with these margin calls, then the contract note issued
by Member for transactions owing to non-compliance of such margin calls
would bear a remark specifying the same. |
| (b) | | The
Member shall maintain a verifiable record of having made such margin
calls and that the clients have not complied with the same. |
| (5) | | With
a view to assist investors engaged in dispute resolution process, Stock
Exchanges shall set up facilitation desks at all investor service
centres as specified by SEBI from time to time. These facilitation desks
would interalia also assist investors in
obtaining documents/details from Stock Exchanges wherever so required
for making application to IGRC and filing arbitration. |
| (6) | | The stock exchanges are advised to:- |
| (a) | | make
necessary amendments to the relevant bye-laws, rules and regulations
for the implementation of the above decision immediately; |
| (b) | | bring
the provisions of this circular to the notice of the members of the
stock exchange and also to disseminate the same through their website;
and |
| (c) | | take steps to make the investors aware of the scheme. |
| (d) | | communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Reports to SEBI. |
| (7) | | This
Circular is issued in exercise of the powers conferred under Section 11
(1) of the Securities and Exchange Board of India Act 1992, read with
Section 9(2)(n) and Section 10 of the Securities Contracts (Regulation)
Act, 1956 to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market and
shall come into effect immediately. |
| (8) | | This Circular is available on SEBI website at www.sebi.gov.in. |
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