Securities and Exchange Board of India issued a Circular on August 11, 2010 to all stock exchanges to mandate the availability of arbitration mechanisms in stock exchanges for settlement of disputes between clients and members. It also seeks to streamline the existing mechanisms in this regard.
All stock exchanges are to maintain a panel of arbitrators consisting of as many persons as necessary to ensure timely settlement of disputes. The members of the panel are to be selected on the basis of (i) age, (ii) qualification in areas of law, finance, accounts, economics, management or administration and (iii) experience in financial services including securities market. Persons chosen to be members of the panel are to disclose any associations that they or their dependents have with the securities market. The stock exchange is to provide at least seven days of continuing education per year to the arbitrators and should appraise the performance of the arbitrators at least annually. A detailed nine-point code of conduct for the arbitrators has been provided. Any claim involving a sum upto `25 lakh will be heard by a sole arbitrator whereas any dispute involving a larger sum will be placed before a panel of three arbitrators.
