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

Under the exchange arbitration mechanism, an investor is aggrieved by an arbitral award passed against them. What is the usual next step available to the aggrieved party?

The aggrieved party can file an appeal before the appellate arbitration panel of the exchange, as provided in the exchange bye-laws and SEBI framework. Clearing corporations, depositories and auditors have no authority to review or reverse an arbitral award.

  1. AFile an appeal before the appellate arbitration panel of the exchangeCorrect
  2. BAsk the clearing corporation to reverse the trade
  3. CApply to the depository to freeze the broker's account
  4. DApproach the broker's auditor for a review

Explanation

The exchange bye-laws and SEBI-prescribed framework provide for an appeal against an arbitral award to a larger appellate arbitration panel of the exchange. Clearing corporations, depositories and auditors have no power to review arbitral awards, so those options are wrong.

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