Investor Grievance Redressal Mechanism for Stock Exchanges: SEBI

Shreya Patel

04 Jul, 2023

Introduction

On July 4, 2022, SEBI introduced changes in the Investor Grievance Redressal Mechanism for Stock Exchanges, including Commodity Derivatives Exchanges/ regulated depositories. The SEBI circular SEBI/HO/MRD1/ICC1/CIR/P/2022/94 has made reference to different Redressal Mechanism, Arbitration Mechanisms in Stock Exchange, and Comprehensive Frameworks for Investor Grievance Redressal Mechanisms. The Investor Grievance Redressal Mechanism framework provides efficient services to the investors and effectively addresses the grievances of the investors in a time-bound manner.

Online-Based Investor Grievance Redressal Mechanism

Securities Board of Exchange of India has implemented an online SEBI Complaints Redress System (SCORES) to enable investors to lodge their complaints related to the capital market against SEBI-listed companies and registered intermediaries.

What is SCORES-SEBI Complaints Redress System?

SCORES is an online platform designed and launched by the securities markets regulator SEBI in June 2011 to help concerned investors to lodge their complaints online with respect to the issues that are covered under the SEBI Act, Securities Contract Regulation Act (SCRA)¹, Depositories Act, and rules and regulations framed under the provisions of the Companies Act. All complaints received by SEBI against listed companies and registered intermediaries under SEBI are dealt with through SCORES.

For an investor to lodge a complaint on SCORES, the following personal details must be compulsorily provided by a complainant:

• Name of the complainant
• Address
• E-mail Address
• PAN 
• Mobile Number

What are the features of the newly introduced Complaint Redressal System?

The SEBI circular has listed the following features of the SEBI Complaint Redressal System are:

• The Grievance Redressal complaints and appeals can be lodged online at any time.
• An acknowledgment receipt of the complaint is generated, and a unique registration number is allotted for future reference and tracking.
• The aggrieved entity can select the preferred online or offline mode for arbitration and Grievance Redressal Complaints.
• The trading members and Depository Participants should have access to the online system.
• The concerned investor or entity will upload an Action Taken Report (ATR) on the Complaints/GRC/Arbitration/Appellate Arbitration.
• If the complaint has been redressed adequately, All Recognized Stock Exchanges, including Commodity Derivatives Exchanges / Depositories, should examine the Action Taken Report (ATR) and dispose of the Complaints/GRC/Arbitration/Appellate Arbitration.
• The status of the complaint can be checked online.
• An investor and an entity can provide and seek clarifications online to each other.
• The life cycle management has an audit trail.
• All the Complaints/GRC/Arbitration/Appellate Arbitration are stored in a central database which would generate relevant MIS reports enabling all Recognized Stock Exchanges, including Commodity Derivatives Exchanges / Depositories, to make appropriate policy decisions and or remedial actions.
• There should be a provision to interlink the online system of /complaints/redressal with SCORES.

According to the circular, The SEBI has asked All Regulated Stock Exchanges and Commodity Derivative Exchanges/ Depositories to put an online complaint redressal system in place within 6 months from the date of the issuance of the SEBI circular. The newly introduced Investor Grievance Redressal System is intended to expedite the redressal process or speedy disposal of investors’ complaints.

The online redressal system would also end the need for physical movement of complaints. Further, reducing the possibility of loss and damage caused to physical complaints would be avoided entirely. This would also facilitate easy access and tracking of grievance complaints.

SEBI has advised All Recognized Stock Exchanges, including Commodity Derivatives Exchanges/Depositories, to widely publicize (on the website of the Exchanges) their online web-based complaints redressal system (Investor Grievance Redressal System).

Hybrid Mode of Conducting Grievance Redressal Complaints and Arbitration / Appellate Arbitration

During the COVID-19 pandemic, stock exchanges were advised to conduct the complaints/GRC/ Arbitration/ Appellate Arbitration process online (hearings/meetings) for speedy redressal. It was observed that the online process saves cost and time for the parties, which is in the best interest of the investors.

Hence, SEBI has asked stock exchanges to continue with the hybrid mode of conducting GRC and arbitration or appellate arbitration process, i.e. online and offline. And the depositories will also have to follow the hybrid mode.

Changes In SEBI Circular No. SEBI/HO/DMS/CIR/P/2017/15 Dated February 23, 2017

Some changes are brought in through an amendment in SEBI Circular No. SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017, for speeding up and strengthening the Investor Grievance Redressal Mechanism.

The circular was revised and exceeded the earlier claim amount limit from Rs 10 lakh to RS. 20 lakh. If the claim amount of dispute is less than or equal to Rs. 20 lakh, then the aggrieved investor, either complainant or respondent, is exempted from paying the arbitration fee, and the exchange will pay the same on behalf of the investor.

Conclusion

Exchanges have to take appropriate steps to make the investors aware of the changes mentioned above/ modifications and make necessary changes to the bye-laws, rules, and regulations for implementing the changes made through the SEBI Circular.

Read our Article: RBI Grievance Redressal Mechanism in Banks: A Framework

FAQ

1. https://www.sebi.gov.in/legal/acts/apr-2021/securities-contracts-regulation-act-1956-as-amended-by-the-finance-act-2021-13-of-2021-w-e-f-april-1-2021-_49750.html