Sebi Issues Arbitration Guidelines for Stock Exchanges 

Regulator Wants Bourses To Appoint A Panel Of Arbitrators To Speed Up Disposal Of Disputes 

THE Securities and Exchange Board of India (Sebi) issued guidelines on Thursday aimed at strengthening the arbitration process at stock exchanges as well as speed up the resolution of disputes. The arbitration committees on the BSE and the NSE help settle disputes between a client and broker, or disputes among brokers.
Under the new rules, the stock exchanges have to maintain a panel of arbitrators and the number of arbitrators in the panel will have to be commensurate to the number of disputes so that each person handles a limited number of cases. This will help in speedy disposal of cases.
While considering a candidate for the arbitration panel, the stock exchanges will have take into account his/her qualification in the area of law, finance, accounts, economics, management, or administration, and his experience in financial services, including the securities market.
The person included in the panel will have to give a declaration that he has not been involved in any act of fraud or found guilty of any economic offence. He will also have to disclose the names of his dependants associated with the securities market as a member, sub-broker. Besides, the bourses will also be required to appraise the performance of the arbitrators and reconstitute the panel based on the appraisal once a year.
An arbitration reference for a claim up to Rs 25 lake shall be dealt with by a sole arbitrator while that above Rs 25 lake shall be dealt with by a panel of three arbitrators, said the Sebi circular, which comes into effect from September 1,2010.
The arbitration reference will have to be concluded by way of issue of an arbitration award within four months from the date of arbitrator appointment. However, at the discretion of the managing director or executive director of an stock exchange for sufficient cause, they could extend the time for issue of the arbitration award by two months on a case-to-case basis.
If the aggrieved party is unhappy with the arbitration award, he can appeal against it to the appellate panel of arbitrators of the stock exchange. However, the appeal must be filed within one month from the date of receipt of the arbitration award.
At present, an investor or a broker seeking redressal on BSE has to first file an application with Investors Grievance Redressal Committee (IGRC), which tries to resolve the dispute. If the parties are not satisfied with the settlement, they are advised to go in for arbitration. If any of the parties is dissatisfied with the arbitration award ,he or she can appeal to the appellate authority, consisting of five arbitrators. If he/she is dissatisfied even with the appellate panels verdict, he/she will have to appeal to the High Court.

Economic Times, New Delhi, 13-08-2010