CIRCULAR
SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/57 April 17, 2023
To
Recognized Limited Purpose Clearing Corporations
Recognised Stock Exchanges
Madam/ Sir,
Sub: Dispute Resolution Mechanism for Limited Purpose Clearing Corporation
(LPCC)
1. Regulation 22F of Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) Regulations, 2018 (‘SECC Regulations’) mandates a
recognized LPCC to put in place a dispute resolution mechanism, for settlement
of disputes or claims arising out of transactions cleared and settled by it, in the
manner as specified by the Board in consultation with the Reserve Bank of India
(RBI).
2. Accordingly, a LPCC shall adopt the following dispute resolution mechanism for
settlement of disputes or claims arising out of transactions cleared and settled by
it:
a) Disputes between Clearing Members inter-se:
(i) The LPCC shall adopt an appropriate dispute resolution mechanism for
deciding disputes between the Clearing Members inter-se as prescribed
by SEBI from time to time.
(ii) Subject to the mechanism prescribed by SEBI from time to time in terms
of 2(a)(i) above, the disputes arising between Clearing Members inter-se
of the LPCC shall be settled by conciliation and/or by an arbitration panel
consisting of three Clearing Members other than the Clearing Member(s)
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who are party to the dispute. The decision of the arbitration panel shall be
final and binding on the parties to the dispute.
(iii) Subject to the mechanism prescribed by SEBI from time to time in terms
of 2(a)(i) above, a Clearing Member, if not satisfied with the decision of the
arbitration panel, may follow the procedure laid down in the Payment and
Settlement Systems Act, 2007 and rules/ directions notified thereunder.
b) Disputes between Clearing Member or its Clients and the LPCC:
(i) All disputes between a Clearing Member and the LPCC shall be resolved
as per the dispute resolution mechanism prescribed by SEBI from time to
time. In case a Clearing Member or the LPCC is not satisfied with the
decision as per such mechanism, then the disputes between the Clearing
Member and LPCC shall be resolved in accordance with the procedure
laid down in the Payment and Settlement Systems Act, 2007 and rules/
directions notified thereunder.
(ii) All disputes between a Client of a Clearing Member and the LPCC shall
be resolved as per the dispute resolution mechanism prescribed by SEBI
from time to time.
c) Disputes Between the Clearing Member(s) and their Clients:
Disputes arising between Clearing Members and their clients arising out of
any transactions cleared and settled or intended to be cleared and/or settled
by the LPCC shall be resolved as per the dispute resolution mechanism
prescribed by SEBI from time to time.
d) Disputes between the LPCC and its vendors/suppliers/service providers
Disputes arising between the LPCC and its vendors/ suppliers/ service
providers shall be resolved as per the dispute resolution mechanism
prescribed by SEBI from time to time.
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3. The LPCC is directed to:
(i) bring the provisions of this circular to the notice of its Clearing Members
and also disseminate the same on its website; and
(ii) make necessary amendments to the relevant bye-laws, rules and
regulations for the implementation of the above circular and communicate
regarding the same to SEBI.
4. This circular shall come into force with immediate effect.
5. This circular is issued in exercise of powers conferred under Section 11 (1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
6. This Circular is available at www.sebi.gov.in under the link “LegalCirculars”.
Yours faithfully,
Pradeep Ramakrishnan
General Manager
Department of Debt and Hybrid Securities
+91-22-26449246
pradeepr@sebi.gov.in
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