The modifications in Sebi’s complaints redressal system

The Indian securities market has witnessed profound development by way of information, infrastructure, higher practices, inventory market wealth, new merchandise and different facets. Yet, retail buyers have been categorised as a ‘pitied’ lot due to their vulnerability to being defrauded.

Investor safety is without doubt one of the essential components in market regulator Sebi’s preamble and accordingly a number of sorts of investor safety measures have been prescribed. However, buyers ought to notice that ‘Right of redressal is a good idea but the rights come with responsibilities!’. It is on this context that one ought to take a look at the Sebi notification in November 2022: buyers shall file a criticism on the Sebi Complaint Redress System (SCORES) inside a yr from the date of reason for motion. Sebi reserves the appropriate to reject a criticism if it has been filed after a yr.

Filing of grievance inside one yr would definitely enhance the investor’s skill to well timed gather the proof/info/data to show his/ her case as in opposition to submitting complaints after an extended interval. Further, this might assist in sustaining topicality of the case and assist the investor in in search of justice nearer to the fee of the stated violation. The time issue has typically been the defeat-point for buyers.

To streamline the investor grievance course of, Sebi has mandated that buyers ought to first file the criticism with the respective middleman/listed firm after which escalate it to the market infrastructure establishments (MIIs). Further, if the criticism will not be redressed/rejected or if the investor will not be glad with the end result; they will file a criticism with Sebi. The regulator has additional strengthened this mechanism by defining redressal timelines at every stage, making certain accountability of varied choice makers. The step-up strategy of grievance redressal would definitely lead to injecting accountability amongst buyers. Overall, it could result in optimum utilization of regulatory sources and lead to efficient redressal of investor grievances.

However, on this context, a query value introspecting is “Whether retail buyers are sufficiently ‘financial-literate’ to know the grievance mechanism and its timelines, contemplating their lackadaisical strategy in the direction of investing and due diligence?’

In common, buyers have been gradual and averse to adopting new modifications. The numerous extensions given by the federal government to hyperlink Aadhaar with PAN is testimony to this reluctant angle. On related strains, many buyers are but to make nominations to their buying and selling and demat accounts and Sebi has been extending the timelines for a similar since final one yr.

Investors have to be vigilant when dealing in securities markets. They ought to be certain that their KYC particulars are updated; ratify commerce communications acquired from exchanges with contract observe; register their nominee(s) in demat account; match their financial institution statements with dividend intimation; confirm their consolidated accounts assertion with their holdings of securities and provides particular PoA (energy of legal professional) fairly than a blanket PoA to their dealer. The regulator expects the investor to be accountable on these facets. They ought to perceive and establish the place they’re being duped and accordingly file for well timed redress of grievances.

Given the extent of monetary literacy and consciousness amongst Indian buyers, it’s essential to publicize the brand new step-up strategy by Sebi by numerous communication mediums. Sebi’s choice to permit investor associations in facilitating submitting of complaints by buyers on SCORES portal is a welcome step on this route.

The new mandate for submitting complaints inside a interval of 1 yr, should take a while to be identified, due to this fact, Sebi could take a lenient view on this till then.

Kuldeep Thareja, Mitu Bhardwaj & Rasmeet Kohli are working with the National Institute of Securities Markets.

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