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The Securities and Exchange Board of India (Sebi) has tweaked the stock exchange arbitration mechanism to facilitate selection of arbitrators through an automatic process.
Arbitration mechanism is a dispute resolution process between market players such as brokers, sub-brokers, clearing members and depositories. Many broker disputes are resolved through this mechanism.
Under the new process, the entire list of arbitrators empanelled with stock exchanges shall be pooled and made publicly available. This common pool of arbitrators will be chosen by an automatic process where neither the parties to the arbitration nor the concerned stock exchanges will be directly involved, Sebi said in a circular.
A system-generated real-time alert (SMS and email among others) will be sent to all entities involved in the particular case. “Further, the communication for the appointment of the arbitrator will be sent immediately and, in any case, not later than the next working day from the day of picking of the arbitrator,” the circular said.
According to Sebi, if there is a conflict of interest in an arbitration reference, the arbitrator will have to decline the arbitration reference upfront. After an arbitrator declines, the ‘automatic process’ will pick the name of another arbitrator.
