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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 with the exchange and the claim value is Rs 4,00,000. The client then asks whether he must pay a deposit with the application. Which statement reflects the general exchange arbitration practice?

Exchange arbitration requires a fee and deposit according to a prescribed scale linked to the claim amount, with the final cost and any refund governed by exchange rules and the award. It is neither free in all cases nor a flat amount, nor payable only by the broker.

  1. AA fee and deposit based on a prescribed scale linked to the claim amount is payable, and the exchange may refund part depending on the outcome as per its rulesCorrect
  2. BNo fee is ever payable by anyone in arbitration
  3. COnly the broker pays and the client pays nothing, irrespective of claim
  4. DThe fee is fixed at Rs 1 lakh for every claim

Explanation

Exchanges prescribe a fee and deposit schedule linked to the claim value, and the final cost and any refund follow the rules and the award. It is not free for all, not paid only by the broker, and not a flat Rs 1 lakh.

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