The Telegraph
Since 1st March, 1999
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More appellate powers sought for exchanges

Mumbai, April 1: A panel studying the bye-laws of bourses has spiked a demand from sections of the market that appeals against orders passed by exchanges be heard by the Securities Appellate Tribunal (SAT).

The committee, set up by the Securities and Exchange Board of India (Sebi) six years back, wants the present system under which sub-brokers provide confirmation memos to their clients to be dispensed with since members are authorised to issue contract notes.

In order to fix responsibility in a more pointed manner, sub-brokers need not register with Sebi, as they do now, but sign up with bourses. Exchanges should be empowered to frame norms to implement this system.

On the question of giving bourses more appellate authority, the panel considered two representations — one from the Association of NSE Members of India and the other from T. Prem Kumar, a member of the committee.

After comparing notes, it was found that the existing regulations did not give members affected by orders of exchanges the right to appeal within. These cover decrees cancelling deals to expulsion of members. In most cases, these fiats are embroiled in a long legal wrangle — either a writ petition is filed in a high court or a civil suit lodged in an appropriate court.

The panel felt there was no need to provide an appellate mechanism as the Investors’ Grievance Cells and arbitration machinery set up by bourses are good enough to address concerns voiced in the representations.

The committee wants bye-laws should not only be published in the Gazette of India and the official gazette of the state in which the main office of the exchange is located, but be posted on the bourse’s website. The amendments made to the norms by the market regulator should be shown on the site, along with the date from which they were implemented.

The laws should allow exchanges to impose a penalty up to Rs 5 lakh for failure to comply with provisions of the listing agreement for the first time; there should be an upper limit of Rs 50 lakh in a financial year.

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