Investors with claims of less than Rs10 lakh, would get certain amount during their claim proceedings from the investor protection fund
Market regulator Securities & Exchange Board of India’s (SEBI) said it will give monetary relief to investors having claims up to Rs10 lakh, during the course of proceedings from the Investor Protection Fund (IPF) of stock exchanges.
According to a release, SEBI said, the Investor Grievance Redressal Committee (IGRC) in the stock exchange would be empowered to look into admissibility of claims in addition to conciliation process. If IGRC concludes that the complaint cannot be resolved through conciliation process, then the stock exchange would block the claim amount admissible to the investor from the deposit of the concerned member. The member would get seven days to pursue next arbitration. If the member does not opt for arbitration, then the stock exchange would release the blocked amount to the investor after the seven day's timeframe.
SEBI said, 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:
i. 50% of the admissible claim value or Rs75,000, 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 Rs1.5 lakh, 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 Rs2 lakh, 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.
Separately, SEBI said, in order to address the complaints regarding 'unauthorised trades', the stock exchanges would ensure that the contract note issued by member for transactions owing to non-compliance of margin calls would bear a remark specifying the same. The member would maintain a verifiable record of having made such margin calls and that the clients have not complied with the same, the market regulator said.
SEBI has also asked stock exchanges to set up facilitation desks at all investor service centres to assist investors in obtaining documents or details from stock exchanges wherever so required for making application to IGRC and filing arbitration.
The market regulator has also reduced the amount payable by investor for appellate arbitration to Rs10,000 from Rs30,000.
Moneylife online survey on PMS shows large-scale underperformance and gross mismanagement by PMS companies. While many investors may not have invested due to lack of data for making an informed decision, a majority of those who have invested, say they lost money
There are 253 portfolio management schemes (PMS) offered by various portfolio managers, brokers and asset management companies, registered with the Securities and Exchange Board of India (SEBI). Moneylife has been campaigning to bring some transparency in how PMS performance data is reported. However, we also wanted to capture the experience of the investors of PMS in our cover story, Portfolio Management Schemes: Will Your Portfolio Blow Up?, through an online Survey. Our Survey received responses from 360 participants out of which nearly one-third have invested in PMS schemes. Here is a summary of the responses.
According to the Survey, lack of disclosure and poor performance are the main cause of concern for the investors which puts them off. As many as 35% said that they were not convinced if their PMS would deliver good returns. A disturbing 45% of the respondents who have invested in PMS say that they were unable to make an informed decision because of lack of data. Just 15% respondents of our survey said that they compared various schemes before investing.
More than half of those who invested in PMS schemes said they have lost their money. When we asked to name the PMS company in which they have lost money, there was no clear poor performing fund house; the names varied from HSBC Wealth Management to JM Financial and Kotak Mahindra PMS to HDFC PMS. Similarly when we asked which was the best PMS company, there was no clear winner either. As many as 65% of the respondents, who have invested, claim that returns were below the benchmark. A mere 5% say that they got returns better than the benchmark. Nearly half the respondents, who have invested, mentioned that their portfolio was churned excessively. This gross mismanagement certainly does not go down well with investors. Nearly 60% of the participants who have invested in PMS have stopped investing altogether. An equivalent proportion of respondents say that they will never recommend PMS to others.
While one-fourth of PMS investors have invested in multiple schemes, an equivalent number of investors were not sure of what kind of service (discretionary, non-discretionary, advisory) they have opted for. Were they greedy or foolish or both? Bankers have a major role to play in selection of PMS. Many abuse the trust of the clients and take them for a ride. In our survey, one-third of the respondents who have invested got to know of PMS through their bank relationship manager or wealth manager. Nearly one-fifth came to know of a PMS through a friend or a colleague and an equivalent number got to know of PMS through advertisements.
In terms of transparency, nearly 30% say that all portfolio details, charges and returns were not disclosed adequately. As many as 60% of the respondents who have invested in PMS mention that portfolio managers did not make smart investment decisions. But still, nearly 45% of the respondents feel that their PMS will deliver a return over 15% in the next five years. Nearly 75% of the respondents, who have invested in PMS, have done so over the last five years. Despite the complaints of gross mismanagement by PMS companies, just 2% have filed a complaint with the regulator.
The survey tried capturing certain key points like, how did the respondents come to know about the scheme, the reasons for not investing, how the investors rate the overall performance of the PMS, whether they lost money on PMS, has losing money on PMS de-motivated them to not to invest further, the names of the scheme where they lost money, whether they think the loss was due to bad selection and/or excessive churning and, most importantly, whether they compared other schemes of PMS before investing in one.
Recently we also analysed the performance of PMS which have disclosed their data (PMS Performance: The Good, the Average and the Ugly) Except for a couple of PMS companies, the performance of the others was patchy.