Description

SEBI modifies the mechanism for handling review, appeal or waiver of penalty requests against Member Committee actions.

Summary

SEBI has modified the Terms of Reference for Member Committees of Market Infrastructure Institutions (MIIs) regarding the handling of review, appeal or waiver of penalty requests. The circular establishes a new two-tier system where appeals against Internal Committee actions go to Member Committee, while appeals against Member Committee actions will be handled by a separate mechanism with Public Interest Directors.

Key Points

  • Requests for review/appeal/waiver against Internal Committee actions or pre-approved policy actions will be placed before Member Committee
  • Appeals against Member Committee actions will be handled by a mechanism with Public Interest Directors and/or Independent External Professionals
  • Governing Board must issue Standard Operating Procedure for handling appeals against Member Committee decisions
  • Further appeals can be made to appropriate authority based on applicable laws
  • Applies to all Stock Exchanges, Clearing Corporations, and Depositories

Regulatory Changes

  • Modified Terms of Reference for Member Committees on regulatory actions
  • Established two-tier appeal mechanism separating appeals against Internal Committee vs Member Committee actions
  • Required Governing Boards to setup independent appeal mechanism for Member Committee decisions
  • Mandated creation of Standard Operating Procedures for new appeal process

Compliance Requirements

  • MIIs must put in place necessary systems for implementation
  • Make necessary amendments to byelaws, rules and regulations
  • Bring provisions to notice of market participants and investors
  • Disseminate circular on their websites
  • Setup appeal mechanism with Public Interest Directors/Independent External Professionals
  • Issue Standard Operating Procedures for handling appeals

Important Dates

  • Effective Date: 45th day from August 5, 2025 (September 19, 2025)
  • Circular Date: August 5, 2025
  • BSE Publication: August 8, 2025

Impact Assessment

Market Impact: Medium - Creates more structured and independent appeal process for regulatory penalties, potentially improving fairness and transparency in disciplinary actions. Operational Impact: Medium - Requires MIIs to establish new governance structures and procedures for handling appeals against Member Committee decisions. Compliance Impact: High - All MIIs must amend their regulatory framework and establish new appeal mechanisms within 45 days.

Impact Justification

Procedural change affecting appeal mechanisms for market participants