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

A client's complaint against a broker is received by the stock exchange. Which sequence best reflects the usual escalation of the exchange-level investor grievance mechanism?

The usual escalation is a complaint to the exchange, then an attempt at conciliation or mediation, and finally arbitration if the matter remains unresolved. Arbitration is a later step, and a complaint does not automatically lead to margin recovery or cancellation of the broker's registration.

  1. AComplaint to exchange, then conciliation or mediation attempt, then arbitration if unresolvedCorrect
  2. BArbitration first, then complaint to the broker, then conciliation
  3. CDirect recovery through the clearing corporation's margin collection
  4. DImmediate cancellation of the broker's registration by the exchange

Explanation

The usual path is complaint lodged and taken up with the member, followed by conciliation or mediation where possible, and arbitration if the dispute stays unresolved. Arbitration is not the first step, and complaints do not directly trigger margin recovery or cancellation of registration.

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