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SEBI explores possibility of expanding arbitration-based resolution for investor grievances
Market regulator Securities and Exchange Board of India (SEBI) is examining the possibility of introducing alternate dispute resolution mechanism in various agreements between the regulated entities and their clients.
Market regulator Securities and Exchange Board of India (SEBI) is examining the possibility of introducing alternate dispute resolution mechanism in various agreements between the regulated entities and their clients. SEBI is in consultation with regulated entities to explore the option, wherever it's possible. The idea is to providing efficacious mechanism for resolving disputes between the investors and the regulated entities.
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Currently, the arbitration mechanism is used mainly against the complaints dealing with brokers and depository participants. As per the people aware of the matter, SEBI is considering it to expand further in the cases of other regulated entities like listed companies, mutual funds and others, where ever it can be implemented easily. The idea is at exploration stage and final view will be formed after consultation with the stake holders.
Besides the idea of exploring arbitration, SEBI has issued investor charter for its regulated entities as announced in the Union Budget. Separate investor charters regarding investor-related activities of various intermediaries have been developed by SEBI. These separate Investor Charters have been developed for stock exchanges, depositories, SEBI-registered intermediaries and regulated entities, including stock brokers, depository participants, asset management companies, registrar and transfer agents, investment advisers, research analysts, merchant bankers, etc. Stock Exchanges, Depositories and various intermediaries have since published the respective charters on their websites. These Investor Charters of SEBI registered institutions and intermediaries contain information related to details of various services provided by the intermediaries to investors, their timelines, importance of preservation of relevant documents by the investors, investor grievance redressal mechanism, etc.
Investment charters are expected to help investors to improve their ease of investing in securities market. As for SEBI’s own charter, efforts have been taken to enhance the effectiveness of investor grievance redressal mechanism. SEBI has been publishing the status of disposal of investor grievances received in SCORES (SEBI Complaints Redress System) on its website on a monthly basis. Details of investor grievances, which are pending for more than three months with different intermediaries, are also being published. In case SEBI receives a large number or repeated complaints on any issue, the root causes are analyzed and if required, appropriate policy changes are made to address the issue. Some of the recent policy initiatives taken by SEBI, after conducting such an analysis, includes amendments to the Investor Protection Fund (IPF) / Investor Service Fund (ISF) and its related matters, to expand the scope of dispute resolution. The norms for processing of investor services requests by the RTAs have also been standardized and simplified and common norms have been introduced for registering or change in details like PAN, KYC and nominee and also for other services involving securities certificate.
SEBI has also directed for providing an electronic interface for processing investor’s queries, complaints and service requests by RTAs. The issue of receiving payments has also been taken care of, now, all holders of physical securities in listed companies are required to mandatorily furnish their PAN, KYC details, including bank account details so as to preempt grievance pertaining to non-receipt of payments and intimation / notification from the company. The other major move was about nominees, now all holders of physical securities in listed companies are required to mandatorily furnish their nomination (or file declaration to opt out) to preempt grievance pertaining to transmission.
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