The government is considering a common appellate authority for insurance and all instruments traded on the stock or commodity exchanges. This comes after the formation of the Financial Stability Development Council, a statutory body to coordinate the functioning of financial market regulators.
The Securities Appellate Tribunal (SAT) will be the umbrella financial markets appellate tribunal and suitably renamed.
At present, SAT is the appellate authority for capital market decisions taken by the Securities & Exchange Board of India. Its jurisdiction will now be expanded to cover commodity futures, insurance and even pension products.
These changes will require amendments to the laws under which the respective regulatory bodies have been formed.
A Bill seeking to amend the Forward Contracts Regulation Act, giving more powers to commodity market regulator Forward Markets Commission, has already been amended to include the provision that SAT will be the appellate authority for the commodity futures market. SAT enjoys a status equivalent to a high court.
The Insurance Regulatory & Development Authority also proposes to amend legislation to make SAT an appellate tribunal for the insurance sector.
IRDA Chairman J Hari Narayan said, "We have proposed to the government that there should be a separate appellate authority for the insurance sector and that should be SAT. A parliamentary committee is studying our proposals."
At present, for decisions under certain sections, the government is the appellate authority while appeals can be made in a high court.
Insurance policyholders can appeal to consumer forums and the ombudsman appointed under the IRDA Act.
SAT was set up under the Sebi Act a decade ago. While legislation governing insurance and commodity futures markets are being amended to make SAT the appellate authority, either the Sebi Act might be amended to rename or restructure SAT, or a separate law will be enacted.
SAT will have to be restructured to include members who are well versed in commodities and insurance so that they have the expertise to hear cases under the laws governing those markets.
A source in the regulatory authority said a common appellate authority for financial markets is preferable, as it can take a holistic view and bring about greater convergence in the legal interpretation of financial market laws.
