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

An investor wishes to file an arbitration reference against a trading member over a dispute arising from a trade. Which statement about the limitation period for filing is most accurate under the exchange rules?

An arbitration reference must be filed within three years from the date on which the dispute arose, in line with the limitation principle in the exchange rules. There is no unlimited window, no one-month limit, and no requirement that the broker first be declared a defaulter.

  1. AThe reference must be filed within three years from the date of the dispute-giving eventCorrect
  2. BThe reference can be filed at any time without limit
  3. CThe reference must be filed within one month of the trade
  4. DThe reference can be filed only after the broker is declared a defaulter

Explanation

The exchange arbitration rules, consistent with the Limitation Act, require the reference to be filed within three years from the date on which the dispute arose. There is no unlimited period, a one-month limit is incorrect, and defaulter declaration is not a precondition for arbitration.

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