SEBI Proposes Measures To Strengthen Investor Grievance Redressal Mechanism in Securities Market
Moneylife Digital Team 20 December 2022
Market regulator Securities and Exchange Board of India (SEBI) on Monday proposed ways to strengthen the existing complaint redressal process in the securities market by making use of online dispute resolution mechanisms.
In its consultation paper, the regulator has suggested measures to deepen the existing Market infrastructure institution or MII-administered mediation and arbitration mechanism by making these processes more accessible and effective. MIIs are stock and commodities exchanges and depositories.
Further, SEBI said these processes should be conducted online on an end-to-end basis using the capacity, technology, and other assistance of online dispute resolution institutions and proposed to modify the existing processes for the benefit of the investor.
The proposed modifications in the existing MII-administered mediation and arbitration mechanism include re-labelling the IGRC (investor grievance redressal committee) process, providing for a sole mediator or arbitrator irrespective of the amount of the dispute and abolishing appellate arbitration system.
One of the suggestions is to extend the MII-administered mediation and arbitration mechanism for resolution of investor grievances against all specified securities market intermediaries.
This will make the grievance redressal processes more simplified, streamlined and efficient for the investors. SEBI has sought comments from the public on the proposals till 9th January.
SEBI has proposed that the IGRC be re-labelled as a panel of mediators. When matters arise, a sole mediator should be appointed for conducting online mediation or conciliation process. Such a process is expected to be concluded within 21 days or three weeks (currently, 15 working days) from the notification of the mediator.
If the consensual resolution is not arrived at within the given period, then the matter should be referred to online arbitration at the request of a disputing party, as per the consultation paper.
To reduce the costs for the parties concerned, it has been proposed that all matters, irrespective of the amount of claim, should be dealt with by a sole arbitrator, and accordingly, the requirement of a panel of arbitrators will be discontinued.
The regulator has also proposed doing away with the appellate arbitration system. This is aimed to provide finality to the award by an arbitrator, end the two-tiered arbitration process, reduce the costs for the parties, eliminate the coordination issues in forming a panel and enable availability of a higher number of arbitrators for resolution of matters.
With the coronavirus pandemic, the MII-administered conciliation and arbitration mechanism happened online, using video conferencing tools. The existing partially- online mode can be enhanced much further by effective use of tools, technologies and platforms which will enable an end-to-end online experience for investors, intermediaries, mediators and arbitrators in conducting the arbitration process online, SEBI said.
Last month, SEBI had issued a master circular on investor grievance redressal through SCORES platform. SCORES is an online platform designed to help investors to lodge their complaints, pertaining to securities market, online with SEBI against listed companies and SEBI-registered intermediaries. All complaints received by SEBI against listed companies and SEBI-registered intermediaries are dealt through SCORES. The mobile app /website facilitates investors to lodge their complaints online with SEBI and, subsequently, view its status.
Presently, in case an investor is facing any issue, the investor first approaches the concerned intermediary for resolution of the complaint. If the investor is not satisfied with the resolution, a complaint is lodged with the SCORES portal. In case, the investor is still unsatisfied with the response, then he or she can opt for MII-based mediation.
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