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

Mr. Iyer has a dispute with his trading member that his complaint to the member did not resolve. Under the exchange arbitration mechanism, which statement is correct regarding the nature of the arbitration award?

The arbitration award is binding on the parties, yet a party who is dissatisfied can appeal to the appellate arbitration panel within the prescribed time limit. It is neither merely advisory nor changeable by the member, and it is not entirely beyond appeal.

  1. AThe award is binding on the parties, but an appeal can be made to the appellate arbitration panel within the prescribed timeCorrect
  2. BThe award is only advisory and neither party need follow it
  3. CThe award can be changed by the trading member at its discretion
  4. DThe award is final and no appeal is possible in any forum

Explanation

Exchange arbitration awards bind the parties, but a dissatisfied party may file an appeal before the appellate arbitration panel within the prescribed time. The award is not advisory, and the member cannot modify it. It is also not absolutely unappealable.

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