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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Grievance Redress Mechanism

Ms. Nair, a retail client, wants to know the main difference between conciliation and arbitration under the securities market ODR mechanism. Which is correct?

Conciliation seeks a mutually agreed settlement with the help of a neutral conciliator, while arbitration ends in a binding award given by the arbitrator. The mechanism is available to retail investors and uses independent neutrals, not the client's adviser.

  1. AConciliation aims at a mutually agreed settlement, while arbitration results in a binding award by the arbitratorCorrect
  2. BConciliation produces a binding award, while arbitration is only a discussion
  3. CBoth can be used only by institutional investors
  4. DBoth are conducted by the investor's own adviser

Explanation

In conciliation a neutral conciliator helps the parties reach a voluntary settlement, whereas in arbitration the arbitrator hears the matter and issues an award that is binding. The reversed statement is wrong, the mechanism is open to retail investors, and the neutral is independent of the adviser.

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