Description

SEBI modifies procedures for handling review, appeal or waiver of penalty requests against Member Committee actions, effective 45 days from circular issuance.

Summary

SEBI has modified the mechanism for handling review, appeal or waiver of penalty requests emanating from Member Committee actions. The changes establish different procedures based on the source of the original action and create new appeal mechanisms involving Public Interest Directors and Independent External Professionals.

Key Points

  • Requests against Internal Committee or pre-approved policy actions continue to go to Member Committee
  • New separate mechanism for appeals against Member Committee decisions from implementation date
  • Governing Board must establish appeal mechanism with Public Interest Directors/Independent External Professionals
  • Standard Operating Procedures required for new appeal processes
  • Further appeals can be made to appropriate authorities under applicable laws

Regulatory Changes

  • Modified Terms of Reference for Member Committee regarding penalty appeals
  • Creation of two-tier appeal system based on source of original regulatory action
  • Requirement for Governing Board to establish new appeal mechanism
  • Mandatory development of Standard Operating Procedures for appeal handling

Compliance Requirements

  • Market Infrastructure Institutions must establish new appeal mechanisms
  • Governing Boards must issue Standard Operating Procedures
  • Implementation of modified procedures within 45 days
  • Ensure Public Interest Directors/Independent External Professionals participate in new appeal process

Important Dates

  • Circular Date: August 5, 2025 (SEBI), August 12, 2025 (NSE)
  • Effective Date: 45 days from SEBI circular issuance (September 19, 2025)

Impact Assessment

This procedural change will streamline penalty appeal processes and provide clearer separation between different types of regulatory actions. Members will benefit from more structured appeal mechanisms, particularly for decisions made directly by Member Committees. The requirement for independent oversight in appeals against Member Committee decisions enhances governance and fairness in the regulatory process.

Impact Justification

Procedural changes affecting member appeal processes but not direct trading operations