Market regulator tells bourses to streamline process for redressal of disputes.
The Securities and Exchange Board of India (Sebi) has asked stock exchanges to streamline the mechanism for arbitration of disputes between a client and a member across various market segments.
Exchanges have been directed to maintain a panel of arbitrators, with their number commensurate with the number of disputes. All arbitration references are to be disposed within the prescribed time.
Before naming someone to the panel, the exchanges have been told to check his or her experience in the securities market and qualifications in the areas of law, finance, accounts and economics. Such persons are to also give an undertaking that he or she "has not been involved in any act of fraud, dishonesty or moral turpitude, or found guilty of any economic offence". A disclosure of the nature of association with the securities market has to be included.
The stock exchange will also be required to provide at least seven days of continuing education to every arbitrator each year. Further, a mechanism to appraise the performance of arbitrators and reconstitution of the panel based on such appraisal at least once a year has to be put in place.
According to the regulator, an arbitration reference for a claim/counter claim up to Rs 25 lakh will be dealt with by a sole arbitrator. Those above Rs 25 lakh shall be dealt with by a panel of three. The exchange will also have to ensure the process of appointment of arbitrator(s) is completed within 30 days from the receipt of application.
Any party aggrieved by an arbitral award may appeal to the appellate panel of arbitrators of the stock exchange within a month from the date of such award.
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The arbitration fees for claims/counter claims of less than Rs 10 lakh has been fixed at 1.3 per cent, subject to a minimum of Rs 10,000 if filed within six months. Else, the fees would be 3.9 per cent, subject to a minimum of Rs 30,000.
For claims between Rs 10 lakh and Rs 25 lakh, the fees would be Rs 13,000, plus 0.3 per cent of the amount above Rs 10 lakh. For claims of more than Rs 25 lakh, it would be Rs 17,500, plus 0.2 per cent of the amount above Rs 25 lakh, subject to a maximum of Rs 30,000.
Exchanges having nationwide terminals, such as NSE, BSE, MCX-SX and USE will have to provide arbitration facility (arbitration and appellate arbitration) at all four regional centres (Delhi, Mumbai, Kolkata and Chennai).
Exchanges have also been directed to preserve the arbitral and appellate arbitral award with acknowledgements, confirming receipt of award by the disputing parties, permanently. Other records pertaining to arbitration have to be preserved for five years from the date of award.