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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Investor Grievances and Arbitration

A client files an arbitration reference against a member. The client is dissatisfied with the arbitrators' award and wishes to challenge it. Which statement is correct as per the general framework of exchange arbitration?

A party unhappy with the first arbitration award can appeal to the exchange's appellate arbitral panel within the prescribed time limit. Further remedies then lie under the law. The award is not absolutely final, the right is not limited to the member, and the clearing corporation does not review awards.

  1. AThe aggrieved party may file an appeal before the appellate arbitral panel of the exchange within the prescribed time, after which further remedies lie as per lawCorrect
  2. BThe award is final and cannot be challenged anywhere
  3. CThe award can be challenged only by the member, not the client
  4. DThe clearing corporation reviews the award and rewrites it

Explanation

The framework provides an appellate arbitration stage at the exchange for a party dissatisfied with the first award, filed within the prescribed time. Further recourse is available under the Arbitration and Conciliation Act through courts. The award is not final, is open to both parties, and is not reviewed by the clearing corporation.

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