Description

SEBI modifies the mechanism for handling review, appeal or waiver of penalty requests against Member Committee actions, effective from 45th day of circular issuance.

Summary

SEBI has modified the mechanism for handling review, appeal or waiver of penalty requests against actions taken by Member Committees of Market Infrastructure Institutions (MIIs). The new framework distinguishes between appeals against Internal Committee actions and appeals against Member Committee decisions, with different handling mechanisms for each.

Key Points

  • Review/appeal requests against Internal Committee actions or pre-approved policy actions will continue to be handled by Member Committee
  • Appeals against Member Committee decisions will be handled by a new mechanism setup by Governing Board with Public Interest Directors and/or Independent External Professionals
  • Further appeals can be made to appropriate authorities under applicable laws
  • Circular becomes effective from 45th day of issuance (approximately September 19, 2025)

Regulatory Changes

  • Modified Terms of Reference for Member Committees regarding penalty review mechanisms
  • Established two-tier appeal structure distinguishing between Internal Committee and Member Committee actions
  • Mandated Governing Board to setup new appeal mechanism with independent professionals
  • Required Standard Operating Procedures for handling Member Committee appeals

Compliance Requirements

  • All MIIs must implement necessary systems for the new appeal mechanism
  • Amendment of relevant byelaws, rules and regulations required
  • Notification to market participants and website dissemination mandatory
  • Governing Board must establish SOP for handling MC appeals

Important Dates

  • Circular Date: August 5, 2025
  • Effective Date: 45th day from issuance (approximately September 19, 2025)

Impact Assessment

This circular creates a more structured and independent appeal process for regulatory actions, potentially improving fairness in penalty reviews. Market participants will benefit from clearer appeal pathways, while MIIs need to establish new governance structures and procedures.

Impact Justification

Medium importance as it affects regulatory appeal processes for market participants but doesn't directly impact trading operations