Investor Charter for Stock Exchanges

CIRCULAR SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/63 May 29, 2024 All Recognised Stock Exchanges Sir / Madam,

Subject: Investor Charter for Stock Exchanges

1. In order to facilitate investor awareness about various activities such as business transacted and services provided to investors on stock exchanges, grievance redressal mechanism, rights and obligations of investors, guidance pertaining to special circumstances related to market activities due to default of brokers, advisory for investors etc., SEBI in November 2021 has formulated the Investor Charter for Stock exchanges containing the information for investors on aforesaid issues and advised Stock Exchanges to disclose the same on their respective websites.

2. In view of the recent developments in the securities market including introduction of Online Dispute Resolution (ODR) platform and SCORES 2.0, it is felt necessary to modify the Investor Charter for Stock Exchanges inter-alia detailing the services provided to Investors, Rights of Investors, various activities of stock exchanges with timelines, Dos and DON’T’s for Investors, Responsibilities of Investors, Code of Conduct for Stock Exchanges and Grievance Redressal Mechanism which is placed at Annexure A.

3. In this regard, Stock Exchanges are advised to disclose the Investor Charter on their respective websites.

4. The circular shall be effective from the date of issuance.

5. All Recognised Stock Exchanges are advised to:

5.1. take steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of this circular; and

5.2. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.

6. This Circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of Page 1 of 8investors in securities and to promote the development of, and to regulate the securities market.

7. The Circular is issued with the approval of the competent authority.

8. This circular is available on SEBI website www.sebi.gov.in under the categories “Legal  Circulars”.

Yours faithfully, Vishal Shukla General Manager Market Regulation Department Policy and Development 2 vishals@sebi.gov.in Phone No.: 022-26449959 Page 2 of 8Annexure - A Investor’s Charter-Stock Exchanges

1. Vision statement for Investors Mission  To provide transparent, equitable and reliable markets with timely and accurate information dissemination for investors.  To provide the highest standards of investor education, investor awareness and investor protection and timely services.

Vision To provide a safe, equitable, transparent, and trusted platform for investors to participate across asset classes with highest standards of integrity for investors.

2. Business transacted by the Exchange with investors:

The Exchange facilitates various products for investors to participate across asset classes viz Equity, Commodities, Derivatives, Debt, Mutual Funds, Government securities etc. Details available on the link [link provided by stock exchanges].

3. Services provided by the Exchanges to investors:

Exchange provides various services to investors electronically through its online platform and physically through the dedicated common Investor Service Centers

(ISC) set for this purpose. Details available on the link [link provided by stock exchanges]

4. Grievance redressal mechanism:

(1) Mode of filing the complaints – Complaints can be lodged on the Exchange in

the following ways:

(i) Through SCORES 2.0 (a web based centralized grievance redressal system of SEBI) [https://scores.sebi.gov.in]

Two Level Review: a. First review done by Exchange b. Second review done by SEBI

(ii) Respective Exchange’s web portal dedicated for the filing of compliant [link to be provided by Exchange]

(iii) Emails to designated email IDs of Exchange [link to be provided by Exchange]

(iv) Through SMARTODR (https://smartodr.in/login) dedicated for the filing of complaint.

Page 3 of 8(2) Regarding documents required for complaint resolution, please refer to link [link provided by stock exchanges].

(3) Process flow for Complaint Resolution Process through Scores 2.0 <<refer to Schedule III of the SEBI Circular dated September 20, 2023>> Online Dispute Resolution (ODR)

1. Online Dispute If the Investor is not satisfied with the resolution Resolution (ODR) provided by the Market Participants, then the platform for online Investor has the option to file the complaint/ Conciliation and grievance on SMARTODR platform for its Arbitration resolution through online conciliation or arbitration.

[SMARTODR]

2. Steps to be followed  Investor to approach Market Participant for in ODR for Review, redressal of complaint  If investor is not satisfied with response of Conciliation and Market Participant, he/she has either of the Arbitration following 2 options:

May escalate the complaint on SEBI SCORES portal. (In this scenario the above steps shall prevail) May also file a complaint on SMARTODR portal for its resolution through online conciliation and arbitration.

 Upon receipt of complaint on SMARTODR portal, the relevant MII will review the matter and endeavour to resolve the matter between the Market Participant and investor within 21 days.  If the matter could not be amicably resolved, then to the matter shall be referred for conciliation.

 During the conciliation process, the conciliator will endeavour for amicable settlement of the dispute within 21 days, which may be extended with 10 days by the conciliator with consent of the parties to dispute.

 If the conciliation is unsuccessful, then the investor may request to refer the matter for arbitration.  The arbitration process to be concluded by arbitrator(s) within 30 days, which is Page 4 of 8extendable by 30 days with consent of the parties to dispute.

 If the parties are not satisfied with the arbitration award, option to file u/s 34 of Arbitration and Conciliation Act, 1996.

5. Rights and Obligations of investors: a) Investor has a Right to: [link provided by stock exchanges]  Get a copy of KYC and other documents executed.  Get Unique Client Code (UCC) allotted.  Place order on complying with the norms agreed to with the Trading Member (TM).

 Get best price for trade execution.  Receive various SMS, emails and information from TMs regarding trade confirmations.  Get Contract notes for trades executed from the TM in the specified format given by the Exchange showing transaction price, brokerage, GST and STT etc. as applicable, separately, within 24 hours of your trades.

 Receive funds and securities/commodities on time within 24 hours from payout.  Receive statement of accounts from TM at least once in a quarter/ month from your TM.  Settlement of accounts as per terms of agreement.

 Get the details of Principal Officer/Compliance Officer of the TM.  Get information of all the businesses done by the TM.  Receive all benefits/material information declared for the investors by the Company.

 Prompt services from the company such as transfers, dematerialization, Sub-divisions and consolidation of holdings in the company.  As an equity holder have a right to subscribe to further issue of capital by the Company.

 Approach nearest Common Investor Service Centre’s for lodging a complaint.  Complaint and avail dispute resolution mechanism against TM or listed company.  Raise queries on excess brokerage and other charges charged by TMs.

 File arbitration against TMs for disputes.  Challenge the arbitration award before court of law.  Privacy and Confidentiality.  Fair & True Advertisement – Potential Risks to be clarified.  Exit from financial product or service.

Page 5 of 8 Receive clear guidance and caution notice when dealing in Complex and High-Risk Financial Products and Services.  Provide feedback on the financial products and service used. b) Investor obligations/ Responsibilities [link provided by stock exchanges]  Deal with a SEBI registered Stock Brokers and Depository Participants for opening trading account and demat account.

 Provide complete documents for account opening and KYC (Know Your Client). Fill all the required details in Account Opening Form / KYC form in own handwriting and cancel out the blanks.  Read all documents and conditions being agreed before signing the account opening form.

 Accept the Delivery Instruction Slip (DIS) book from DP only (pre- printed with a serial number along with client ID) and keep it in safe custody and do not sign or issue blank or partially filled DIS.

 Always mention the details like ISIN, number of securities accurately.  Inform any change in information for updation of KYC and obtain confirmation of updation in the system.  Regularly verify balances and transaction/ demat statement and reconcile with trades / transactions.

 Appoint nominee(s) to facilitate heirs.  Do not fall prey to fraudsters sending emails and SMSs luring to trade in stocks / securities promising huge profits.

6. Guidance pertaining to special circumstances related to market activities:

Default of Trading Members (TMs)

(1) When a TMs defaults, the Exchange carries out the following steps for benefit

of investor:  Dissemination on Exchange website with regard to default of the TM.  Issue of Public Notice informing declaration of default by a TM and inviting claims within specified period.  Intimation to clients of defaulter TMs via Emails and SMS for facilitating lodging of claims within specified period

(2) Following information made available on Exchange Website for information of Investors [link to be provided by the stock exchanges]:  Norms for eligibility of claims for compensation from IPF.  FAQ on processing of investors’ claims against defaulter TM.

 Form for lodging claim against defaulter TM.  Standard Operating Procedure (SOP) for handling of Claims of Investors in the Cases of default by TMs  Provision to check online status of claims on Exchange Website.

 Claim processing policy against Defaulter/Expelled TMs.  List of Defaulter/Expelled TMs and public notice issued.

Page 6 of 8(3) Standard Operating Procedure (SOP) for Handling of Claims of Investors in the Cases of Default by TMs (excluding Commodity Derivatives Exchanges) Sr. Action Timeline No.

1. Disablement of the TM T day

2. Information to investors about T+1 day disablement of the TM on website and through SMS and email

3. Pre-filled forms to be sent to clients T+15 days providing information regarding balances with the TM (only in case of SOP trigger)

4. Claim lodgement T+ 75 days Clients to fill the claim form and provide the supporting documents

5. Declaration of Default by the TM T+120 days

6. Information to investors about default Within 3 working days from the of TM on website, through SMS, email date of declaration of defaulter and newspapers.

7. Processing, auditing, and settlement Within 60 days of receipt of the of claims claim form from the clients post declaration of default and T+135 days where prefilled forms are received.

8. Request for review of the claim by Within 90 days of receipt of client intimation of the decision of the IPFT from the stock exchange

9. Processing, auditing, and settlement Within 60 days of receipt of of review claims review application.

10. Request for 2nd review of the claim by Within 90 days of receipt of client intimation of the decision of the IPFT from the stock exchange

11. Processing, auditing, and settlement Within 60 days of receipt of of review claims review application.

7. Dos and Don’ts - Advisory for Investors a) Do’s of Investing: Please refer to the link [link provided by stock exchanges] b) Do’s for Grievance Redressal: Please refer to the link [link provided by stock exchanges] c) Don’ts of Investing: Please refer to the link [link provided by stock exchanges] Page 7 of 88. Code of Conduct for Stock Exchanges [link to be provided by the Exchanges]

A Stock Exchange shall:

(a) always abide by the provisions of the Act, Securities and Exchange Board of India Act 1992, any Rules or Regulations framed thereunder, circulars, guidelines and any other directions issued by the Board from time to time.

(b) adopt appropriate due diligence measures.

(c) take effective measures to ensure implementation of proper risk management framework and good governance practices.

(d) take appropriate measures towards investor protection and education of investors.

(e) treat all its applicants or members in a fair and transparent manner.

(f) promptly inform the Board of violations of the provisions of the Act, Securities and Exchange Board of India Act 1992, rules, regulations, circulars, guidelines or any other directions by any of its members or issuer.

(g) take a proactive and responsible attitude towards safeguarding the interests of investors, integrity of stock exchange’s systems and the securities market.

(h) endeavor for introduction of best business practices amongst itself and its members.

(i) act in utmost good faith and shall avoid conflict of interest in the conduct of its functions.

(j) not indulge in unfair competition, which is likely to harm the interests of any other Exchange, their participants or investors or is likely to place them in a disadvantageous position while competing for or executing any assignment.

(k) segregate roles and responsibilities of key management personnel within the

stock exchange including: a. Clearly mapping legal and regulatory duties to the concerned position b. Defining delegation of powers to each position c. Assigning regulatory, risk management and compliance aspects to business and support teams

(l) be responsible for the acts or omissions of its employees in respect of the conduct of its business.

(m) monitor the compliance of the rules and regulations by the participants and shall further ensure that their conduct is in a manner that will safeguard the interest of investors and the securities market.

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