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

A client has a dispute with a trading member regarding a trade executed on an exchange. If the client is dissatisfied with the outcome of the complaint redress at the exchange, which mechanism is available next for resolving the dispute under the exchange framework?

Arbitration under the exchange's bye-laws and rules is the next mechanism. Disputes between a client and a trading member arising from exchange dealings can be referred to arbitrators, after the complaint redress stage, rather than being settled by margin committees or automatic fund payouts.

  1. AArbitration under the exchange's bye-laws and rulesCorrect
  2. BDirect trial in the stock exchange trading room
  3. CReferral to the clearing corporation's margin committee
  4. DAutomatic refund by the Investor Protection Fund

Explanation

After complaint redress and conciliation or mediation options, the exchange framework provides arbitration between client and trading member for disputes arising from dealings on the exchange. The margin committee deals with risk matters, and the IPF compensates only in default or expulsion situations, not as an automatic refund for any dispute.

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