28th September 2010
Members are hereby informed that the SEBI vide its circular no. CIR/MRD/DSA/29/2010 dated August 31, 2010 has advised the Exchange to incorporate the contents of the aforesaid circular in its relevant bye-laws, rules & regulations and also bring the contents of this circular to the notice of the members of the Exchange. Accordingly, the contents of the said circular are appended below for information & compliance :-
CIR/MRD/DSA/29/2010 August 31, 2010
The
Managing Director/Executive Director, of all Stock Exchanges.
Dear
Sir / Madam,
Subject: Arbitration Mechanism in Stock Exchanges
I. SEBI, vide circular No. CIR/MRD/DSA/24/2010 dated August 11, 2010, has streamlined the arbitration mechanism available at stock exchanges for arbitration
of disputes (claims, complaints, differences, etc.) arising between a client and a member (Stock Broker, Trading Member and Clearing Member) across various market segments.
II. Based on feedback from investors, it has been decided to replace Para 7 of the SEBI Circular Ref. No. CIR/MRD/DSA/24/2010 dated August 11, 2010 by the following:-.
“7.
Arbitration Fees
7.1 Each of the parties to arbitration (other than a client with a claim / counter claim upto Rs. 10 lakh and filing the arbitration reference for the same within six months) shall deposit an amount, as may be prescribed by the stock exchange, at the time of making arbitration reference. The
deposits (exclusive of statutory dues - stamp duty, service tax, etc.) shall
not
exceed the amount as indicated under:
|
Amount of Claim / Counter Claim,
whichever is higher (Rs.) |
If claim is filed
within six months |
If claim
is filed after six months |
|
≤ 10,00,000 |
1.3% subject to a
minimum of Rs.10,000 |
3.9% subject
to a minimum of Rs.30,000 |
|
> 10,00,000 - ≤ 25,00,000 |
Rs. 13,000 plus 0.3%
amount above Rs. 10
lakh |
Rs. 39,000 plus
0.9% amount above Rs. 10 lakh |
|
> 25,00,000 |
Rs. 17,500 plus
0.2 % amount above Rs. 25
lakh subject to maximum of Rs. 30,000 |
Rs. 52,500 plus
0.6 % amount above
Rs.
25 lakh subject to maximum of
Rs. 90,000 |
7.2 A client, who has a claim / counter claim upto Rs. 10 lakh and files arbitration reference for the same within six months, shall be exempt from the
deposit.
7.3 In all cases, on issue of the arbitral award the stock exchange shall refund the deposit to the party in whose favour the award has been passed. In cases where claim was filed within six months period, the full
deposit made
by the party against whom the
award has
been passed, shall be appropriated towards arbitration fees. In cases where
claim was filed after six months, one-third of the deposit collected from the party against whom the award
has
been
passed, shall
be appropriated towards arbitration fees
and balance
two-third amount shall be credited to the Investor Protection Fund of the respective stock exchange.
Note: Six months (as referred to in paras 7.1, 7.2 and 7.3 above) shall be
computed from the end of the quarter during which the disputed transaction(s)
were executed/
settled, whichever is relevant
for
the dispute, and after excluding:-
a. the time taken by the Investors Grievances
Redressal
Committee of the Stock Exchange (the time taken from the date of receipt of
dispute till the decision by the committee) to resolve
the dispute under its Rules, Bye-laws & Regulations, and
b. the time taken by the member to attempt the resolution of the dispute (the time from the date of receipt of dispute by the member to the date of receipt of the member’s last communication by the client) or one month from
the date of receipt of the dispute by the member, whichever is earlier.
7.4 A
party filing an appeal before the appellate panel [as mentioned under item 6 above] shall pay a fee not exceeding Rs. 30,000,as may be prescribed by the
stock
exchange,
in addition to
statutory dues (stamp duty, service tax, etc) along with the appeal.”
III. 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.
IV. SEBI inspection of stock exchange shall cover implementation of this circular.
V. 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 Contracts
(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 September 1, 2010.
VI. This Circular is available on SEBI website at www.sebi.gov.in
.
Yours faithfully,
Rajesh Kumar D
+91-22-26449242
rajeshkd@sebi.gov.in
CC: All SEBI recognized Investor Associations
(Company
Secretary)