Sebi To Strengthen Investor Grievance Handling Mechanism

Markets watchdog Sebi on Wednesday decided to revamp its complaint redressal system as part of efforts to strengthen the investor grievance handling mechanism.

At its meeting here, the Sebi board cleared various measures to boost the investor grievance handling mechanism and linking SCORES (Sebi Complaint Redress System) with the Online Dispute Resolution Mechanism.

It would also look at reducing timelines, introducing auto-routing of the complaint to concerned regulated entities, and auto-escalation of complaints in case of non-adherence to the prescribed timelines by the regulated entity.

Among others, Sebi, in a release after the board meeting, said it would also provide two levels of review. The first review would be by the designated body if the investor is dissatisfied with the resolution provided by the regulated entity concerned.

The second review would be done by Sebi if the investor is still dissatisfied after the first review.

Linking SCORES with Online Dispute Resolution (ODR) platform would provide an additional option for investors of all regulated entities.

A new portal for collection of market intelligence inputs will also be put in place, Sebi said.

To facilitate transparency in price discovery, Sebi has decided to amend the regulations pertaining to Non-Convertible Debt Securities (NCDs).

The revised norms will come into effect from January 1, 2024.

The board has cleared amendments to Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015 requiring listed entities having outstanding listed NCDs (as on December 31, 2023) to list their subsequent issuances of NCDs at the stock exchanges.

Certain issuances, including capital gains tax debt securities, will be exempted from the revised framework.

"Non-convertible securities issued pursuant to an agreement entered into between the listed entity of such securities and multilateral institutions, subject to the condition that such non-convertible debt securities shall be locked-in and held till maturity and accordingly shall be unencumbered," the release said.

According to Sebi, if an entity with listed debt securities has outstanding unlisted NCDs as on December 31, 2023, the entity will have the option to list them, but it would not be mandatory to do so.

Subject to certain conditions, entities will be allowed to delist their debt securities.

"Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, approval of 100 per cent of the debt security holders is mandated for delisting of debt securities. This is because, unlike equity which is a perpetual instrument, listed debt securities have a finite term to maturity," Sebi said.

Entities having privately placed, listed debt securities wherein the number of debt security holders is less than 200, shall be eligible to delist their debt securities under this framework, it added.

As part of efforts to boost the corporate bond market, Sebi has decided to enable direct participation by clients in the Limited Purpose Clearing Corporation (LPCC).

"Since timely availability of funds and securities is critical in a repo market, direct participation of both borrowers and lenders can widen the market.

"Accordingly, the board has approved the proposal to additionally facilitate participation by entities desiring direct participation (not through a clearing member) in repo transactions in corporate bonds of the LPCC," the release said.

The launch of LPCC is expected to facilitate active trading, especially by market makers, by enabling them to finance their inventory of bond holdings through an active repo market. This in turn is expected to improve liquidity in the corporate bond market, it added.

Meanwhile, the board also approved Sebi's annual report for 2022-23.

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Markets watchdog Sebi on Wednesday decided to revamp its complaint redressal system as part of efforts to strengthen the investor grievance handling mechanism.

At its meeting here, the Sebi board cleared various measures to boost the investor grievance handling mechanism and linking SCORES (Sebi Complaint Redress System) with the Online Dispute Resolution Mechanism.

It would also look at reducing timelines, introducing auto-routing of the complaint to concerned regulated entities, and auto-escalation of complaints in case of non-adherence to the prescribed timelines by the regulated entity.

Among others, Sebi, in a release after the board meeting, said it would also provide two levels of review. The first review would be by the designated body if the investor is dissatisfied with the resolution provided by the regulated entity concerned.

The second review would be done by Sebi if the investor is still dissatisfied after the first review.

Linking SCORES with Online Dispute Resolution (ODR) platform would provide an additional option for investors of all regulated entities.

A new portal for collection of market intelligence inputs will also be put in place, Sebi said.

To facilitate transparency in price discovery, Sebi has decided to amend the regulations pertaining to Non-Convertible Debt Securities (NCDs).

The revised norms will come into effect from January 1, 2024.

The board has cleared amendments to Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015 requiring listed entities having outstanding listed NCDs (as on December 31, 2023) to list their subsequent issuances of NCDs at the stock exchanges.

Certain issuances, including capital gains tax debt securities, will be exempted from the revised framework.

"Non-convertible securities issued pursuant to an agreement entered into between the listed entity of such securities and multilateral institutions, subject to the condition that such non-convertible debt securities shall be locked-in and held till maturity and accordingly shall be unencumbered," the release said.

According to Sebi, if an entity with listed debt securities has outstanding unlisted NCDs as on December 31, 2023, the entity will have the option to list them, but it would not be mandatory to do so.

Subject to certain conditions, entities will be allowed to delist their debt securities.

"Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, approval of 100 per cent of the debt security holders is mandated for delisting of debt securities. This is because, unlike equity which is a perpetual instrument, listed debt securities have a finite term to maturity," Sebi said.

Entities having privately placed, listed debt securities wherein the number of debt security holders is less than 200, shall be eligible to delist their debt securities under this framework, it added.

As part of efforts to boost the corporate bond market, Sebi has decided to enable direct participation by clients in the Limited Purpose Clearing Corporation (LPCC).

"Since timely availability of funds and securities is critical in a repo market, direct participation of both borrowers and lenders can widen the market.

"Accordingly, the board has approved the proposal to additionally facilitate participation by entities desiring direct participation (not through a clearing member) in repo transactions in corporate bonds of the LPCC," the release said.

The launch of LPCC is expected to facilitate active trading, especially by market makers, by enabling them to finance their inventory of bond holdings through an active repo market. This in turn is expected to improve liquidity in the corporate bond market, it added.

Meanwhile, the board also approved Sebi's annual report for 2022-23.