Executive Summary:
This circular, issued by SEBI on November 06, 2020, clarifies and strengthens the Investor Grievance Redressal Mechanism based on feedback from market participants. It specifies timelines for complaint resolution by Stock Exchanges and the handling of complaints by the Investor Grievance Redressal Committee (IGRC). The provisions of this circular come into effect from January 01, 2021.
Key Points / Main Content:
* **Resolution of Complaints by Stock Exchange:**
* Complaints must be resolved within 15 working days from receipt, with a 7-day window for requesting additional information.
* Reasons for non-redressal within the stipulated timeframe must be recorded.
* Service-related complaints should be resolved internally, but can be referred to the IGRC if the complainant is unsatisfied, with recorded reasons.
* For trade, settlement, and service deficiency complaints resulting in financial loss, if unresolved, the Stock Exchange must refer them to the IGRC with necessary documentation and assistance.
* **Handling of Complaints by IGRC:**
* IGRC has 15 working days to resolve complaints through conciliation, extendable to 30 days if additional information is required from the Stock Exchange.
* The IGRC must not dismiss complaints due to lack of information or complexity.
* IGRC will determine the admissible claim value, and Stock Exchanges shall block this amount from the member's deposit.
* Stock Exchanges bear the expenses of the IGRC; no fees are charged to complainants or members.
* Stock Exchanges must organize regular training programs for IGRC members in consultation with NISM, funded by the Investor Service Fund (ISF).
* **Arbitration:**
* For disputes related to transactions, complainants/members must first refer to the IGRC and/or Stock Exchange arbitration mechanism before other legal remedies.
* Arbitrators appointed under the Stock Exchange mechanism have the competence to rule on their jurisdiction.
* Complainants/members unsatisfied with IGRC recommendations must use the Stock Exchange arbitration mechanism within six months of the recommendation date.
* **Stock Exchange Responsibilities:**
* Amend bylaws, rules, and regulations for immediate implementation.
* Notify members of the circular's provisions and disseminate information on their website.
* Report implementation status to SEBI in Monthly Development Reports.
Impact Analysis:
* **Stock Exchanges:**
* *Impact:* Required to strengthen their investor grievance redressal mechanisms, adhere to stricter timelines for resolving complaints, and provide necessary support to the IGRC. They also need to bear the expenses of IGRC and organize training programs for IGRC members.
* *Action Required:* Amend bylaws, rules, and regulations, inform members, update website, report to SEBI, and organize IGRC training.
* **Stock Exchange Members:**
* *Impact:* Subject to the revised complaint resolution process and potential blocking of funds for admissible claims. They are also required to participate in the IGRC and arbitration processes before resorting to other legal remedies.
* *Action Required:* Familiarize themselves with the new procedures, cooperate with Stock Exchanges and the IGRC in providing necessary information, and participate in arbitration if necessary.
* **Investors:**
* *Impact:* Benefit from a strengthened and faster grievance redressal mechanism, with clearer timelines for resolution and access to the IGRC and arbitration processes.
* *Action Required:* Utilize the IGRC and arbitration mechanisms provided by Stock Exchanges for resolving disputes with members.
* **Investor Grievance Redressal Committee (IGRC) members:**
* *Impact:* Subject to regular training programs.
* *Action Required:* Participate in training programs.
Key Entities Referenced
Investor Grievance Redressal Mechanism: The central subject of the circular, concerning the process for addressing investor complaints.
Stock Exchange: Refers to all stock exchanges that are addressed in the circular and are responsible for implementing the guidelines.
Circular No. CIRMRDDSA242010: A previous circular, dated August 11, 2010, related to investor grievance redressal, to which the current circular provides clarification.
Circular No. CIRMRDDSA22011: A previous circular, dated February 09, 2011, related to investor grievance redressal, to which the current circular provides clarification.
Circular No. CIRMRDICC302013: A previous circular, dated September 26, 2013, related to investor grievance redressal, to which the current circular provides clarification.
Investor Grievance Redressal Committee (IGRC): A committee responsible for resolving investor complaints, especially those related to trade, settlement, and service deficiencies.
National Institute of Securities Markets (NISM): An institute that stock exchanges consult with for regular training programs for IGRC members.
Investor Service Fund (ISF): A fund of the Stock Exchange used to cover the cost of training programs for IGRC members.
SEBI/HO/MIRSD/DOC/CIR/P/2020/226 November 06, 2020
To,
The Managing Director/Executive Director,
All Stock Exchanges
Dear Madam/Sir,
Subject: Investor Grievance Redressal Mechanism
1. In order to further strengthen the Investor Grievance Redressal Mechanism, based on
feedback received from market participants and Working Group constituted for the purpose,
the following are issued as clarification to Circular No. CIR/MRD/DSA/24/2010 dated August
11, 2010, Circular No. CIR/MRD/DSA/2/2011 dated February 09, 2011, and Circular No.
CIR/MRD/ICC/30/2013 dated September 26, 2013.
2. Resolution of complaints by Stock Exchange
i.Timeline
Stock Exchange shall ensure that the investor complaints shall be resolved within 15
working days from the date of receipt of the complaint. Additional information, if any,
required from the complainant, shall be sought within 7 working days from the date of
receipt of the complaint. The period of 15 working days shall be counted from the date of
receipt of additional information sought.
Stock Exchange shall maintain a record of all the complaints addressed/redressed within
15 working days from the date of receipt of the complaint/additional information. If complaint
is not resolved within stipulated time frame, then the reason for non redressal in given time
frame shall also be recorded.
ii. Service related complaints
Stock Exchange shall resolve service related complaints at its end. However, in case the
complainant is not satisfied with the resolution, the same may be referred to the Investor
Grievance Redressal Committee (“IGRC”), after recording the reasons in writing by the
Chief Regulatory Officer of the Stock Exchange or any other officer of the Stock Exchange
Page 1 of 3authorized in this behalf by the Managing Director. Service related complaints shall include
non-receipt/ delay of Account statement, non-receipt/ delay of bills, closure of account/
branch, technological issues, shifting/closure of branch without intimation, improper service
by staff, freezing of account, alleged debit in trading account, contact person not available
in Trading member’s office, demat account transferred without permission etc.
iii. Complaints to be referred to IGRC
For Complaints related to trade, settlement and ‘deficiency in services’, resulting into any
financial loss, the stock exchange shall resolve the complaint on its own as per the time
lines prescribed. However, if complaint is not resolved amicably, the same shall be referred
to the IGRC, after recording the reasons in writing by the Chief Regulatory Officer of the
Stock Exchange or any other officer of the Stock Exchange authorized in this behalf by the
Managing Director.
It shall be the responsibility of the Stock Exchange to provide documents/ necessary
information after collecting the same from the member and/ or the complainant and provide
necessary assistance to IGRC to ensure resolution of complaints in a timely manner.
3. Handling of complaints by IGRC
i. IGRC shall have a time of 15 working days to amicably resolve the investor complaint
through conciliation process. If IGRC needs additional information, then IGRC may request
the Stock Exchange to provide the same before the initiation of the conciliation process. In
such case, where additional information is sought, the timeline for resolution of the
complaint by IGRC shall not exceed 30 working days.
ii. IGRC shall not dispose the complaint citing “Lack of Information and complexity of the
case”. The IGRC shall give its recommendation to Stock Exchange.
iii. IGRC shall decide claim value admissible to the complainant, upon conclusion of the
proceedings of IGRC. In case claim is admissible to the complainant, Stock Exchanges
shall block the admissible claim value from the deposit of the member as specified in this
regard.
iv. Expenses of IGRC shall be borne by the respective Stock Exchange and no fees shall be
charged to the complainant/member.
v. The Stock Exchange shall organize regular training program for IGRC members in
consultation with National Institute of Securities Markets (“NISM”). The cost of such
program shall be borne by Investor Service Fund (“ISF”) of the Stock Exchange.
Page 2 of 34. Arbitration
For any dispute between the member and the client relating to or arising out of the transactions
in Stock Exchange, which is of civil nature, the complainant/ member shall first refer the
complaint to the IGRC and/ or to arbitration mechanism provided by the Stock Exchange
before resorting to other remedies available under any other law.For the removal of doubts, it
is clarified that the sole arbitrator or the panel of arbitrators, as the case may be, appointed
under the Stock Exchange arbitration mechanism shall always be deemed to have the
competence to rule on its jurisdiction.
A complainant/member, who is not satisfied with the recommendation of the IGRC, shall avail
the arbitration mechanism of the Stock Exchange for settlement of complaints within six
months from the date of IGRC recommendation.
5. 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) communicate to SEBI, the status of implementation of the provisions of this circular in
the Monthly Development Reports to SEBI.
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 read with Section 10 of the Securities
Contract (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
from January 01, 2021.
7. This Circular is available on SEBI website at www.sebi.gov.in.
Yours faithfully,
Pranjal Jayaswal
Deputy General Manager
MIRSD
Email - pranjal@sebi.gov.in
Phone No. +91-22-2644 9402
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