PASS Securities Operations and Risk Management Examination Difficulty: Beginner 2 Questions   5 min read
📌 Chapter 7.1 — INTRODUCTION

Consider the scenario where a retail client remains dissatisfied even after the Stock Exchange concludes its first-level review of a grievance regarding an incorrect trade execution. As an operations professional at a broking firm, you have already submitted the necessary Action Taken Reports (ATRs) and supporting documentation to the Exchange, but the client chooses to escalate the matter. They believe the resolution offered by the Designated Body—the Exchange—did not sufficiently address their loss of INR 25,000 due to a suspected system glitch during the T+1 settlement cycle.

In this high-stakes environment, the SEBI second-level review acts as the ultimate regulatory arbiter. If the complainant is unhappy with the outcome of the first review, they can approach SEBI through the SCORES 2.0 portal within 15 calendar days from the date of receipt of the first-level disposal order. Once this escalation is triggered, SEBI reviews the entire trail of evidence, including your firm’s internal communication logs, the trade confirmations, and the Exchange’s initial findings.

This process ensures that the regulator holds both the broker and the market infrastructure institution accountable for maintaining systemic integrity.

For an operations lead, this stage is critical because it tests the robustness of your record-keeping. If your firm failed to maintain a clear trail of client instructions or if the margin reporting was inconsistent with the depository records, the regulator’s scrutiny will be intense. The SEBI review is not merely a formality but a deep dive into the adherence to SEBI circulars and the standard operating procedures of the firm.

You must ensure that every piece of correspondence, from the initial client query to the final internal resolution report, is archived and ready for production.

Understanding this timeline is vital for your firm’s compliance health. Missing an internal deadline for an ATR or failing to provide data within the mandated window during an escalation can lead to penalties or a tarnished reputation on the Exchange’s surveillance dashboard. By viewing the second-level review as a final audit of your operational excellence, you transform a potentially damaging conflict into an opportunity to demonstrate your firm’s commitment to fair trading practices and proactive risk management.

Nuance

⚠️ Nuance
A common pitfall for candidates is confusing the 15-day window for the client to appeal to SEBI with the internal firm deadlines for resolving basic complaints. Candidates often incorrectly assume that the firm itself has 15 days to handle the second-level appeal, whereas, in reality, the 15-day limit applies specifically to the client’s right to escalate to the regulator. Always distinguish between the client’s window to approach the regulator and the firm’s obligation to provide documentation during the review process.

Check Your Understanding

Practice Question 1

An investor is dissatisfied with the resolution provided by the National Stock Exchange (NSE) regarding a trade dispute. Within what timeframe must the investor approach SEBI for a second-level review via the SCORES portal?

Practice Question 2

Which of the following best describes the purpose of a second-level review by SEBI in the grievance redressal mechanism?

This is a companion read for Section 7.1 — INTRODUCTION from PASS Securities Operations and Risk Management Examination by Akhilesh Gururani, available on Amazon Kindle.

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