Ayush Rao, a retail investor, has recently lodged a formal complaint with the stock exchange against his brokerage firm, Paisamoney Securities Limited ('PSL'). Rao alleges that PSL conducted unauthorized trades in his ac

CS Professional · Arbitration, Mediation and Conciliation · PYQS · December 2024
Ayush Rao, a retail investor, has recently lodged a formal complaint with the stock exchange against his brokerage firm, Paisamoney Securities Limited ('PSL'). Rao alleges that PSL conducted unauthorized trades in his account, resulting in significant financial losses. He claims that these trades were executed without his consent and in violation of his investment instructions. Rao had previously agreed to the brokerage's terms of service, which included an arbitration clause for resolving disputes. He lodged a formal complaint in the stock exchange's Investor Grievance Redressal Committee (IGRC). IGRC first conducted a preliminary review of Rao's complaint and confirmed that it falls within their jurisdiction. Following this, the stock exchange attempted to resolve the issue through conciliation efforts, which unfortunately did not lead to a satisfactory resolution. As the conciliation process failed, the complaint was referred to arbitration. Explain the arbitration process in such cases and how the complaints are handled by IGRC.

Answer & Explanation:

Arbitration processes at stock exchanges serve as mechanisms for resolving disputes between members, brokers, traders, and other participants in the market. The arbitration process at Stock Exchanges is given below: Applicant submits arbitration application to Exchange Application is verified and sent to Respondent Arbitrator appointed and documents forwarded to arbitrator Hearings held by arbitrator Arbitrator passes award Award debited if in favor of constituent Appeal filed by aggrieved party Hearings held and appeal award passed Petition filed under section 34 of the Arbitration and Conciliation Act, 1996 in Court. If the applicant is not satisfied with award passed by arbitration panel, he can go for appeal against the award to Appellate mechanism in the exchange itself. Handling of complaints by Investor Grievance Redressal Committee (IGRC) IGRC shall have a time of 15 working days to amicably resolve the investor complaint through conciliation process. If IGRC needs additional information, then IGRC may request the Stock Exchange to provide the same before the initiation of the conciliation process. In such case, where additional information is sought, the timeline for resolution of the complaint by IGRC shall not exceed 30 working days. IGRC shall not dispose the complaint citing 'Lack of Information and complexity of the case'. The IGRC shall give its recommendation to Stock Exchange. IGRC shall decide claim value admissible to the complainant, upon conclusion of the proceedings of IGRC. In case claim is admissible to the complainant, Stock Exchanges shall block the admissible claim value from the deposit of the member as specified in this regard. Expenses of IGRC shall be borne by the respective Stock Exchange and no fees shall be charged to the complainant/member. The Stock Exchange shall organize regular training program for IGRC members in consultation with National Institute of Securities Markets ('NISM'). The cost of such program shall be borne by Investor Service Fund ('ISF') of the Stock Exchange.

Topics: Investor Grievance Redressal

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