Arbitration Mechanism through Stock Exchanges - Introduction of Automatic Process and Common Pool of arbitrators
Summary
SEBI mandates the creation of a 'Common Pool' of arbitrators by pooling panels from all stock exchanges with nation-wide trading terminals. An 'Automatic Process' using randomized computer selection replaces manual arbitrator choice to ensure neutrality and efficiency in dispute resolution. Stock exchanges are required to amend their bye-laws immediately to implement these changes effective April 1, 2013.
Text
List of Arbitrators on the panel of all stock exchanges having nation-wide trading terminals shall be pooled and will be called a 'Common Pool'. This list shall be made publicly available including by way of display on websites of the stock exchanges.
'Common pool' of Arbitrators will consist of Arbitrators listed on the panels of all stock exchanges having nation-wide trading terminals. The pooling of arbitrators will be done centre-wise... If the client and member fail to choose the Arbitrator(s) from the Common Pool, the Arbitrator(s) will be chosen by an 'Automatic Process'
The 'Automatic Process' will entail a randomized, computer generated selection of Arbitrator, from the list of Arbitrators in the 'Common Pool'. The selection process shall be in chronological order of the receipt of arbitration reference
The 'Automatic Process' will send a system generated, real time alert (sms, email etc.) 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
The selection of Arbitrators by Stock Exchanges as done currently, shall henceforth be replaced by the 'Automatic Process'.
In case of any probable conflict of interest in an arbitration reference being assigned to any Arbitrator the Arbitrator will have to upfront decline the arbitration reference. After the said arbitrator declines, the 'automatic process' will pick the name of another Arbitrator.
In case of conflict of interest by the arbitrator, the information for the same may reach the stock exchange on which the dispute has taken place within 15 days of receipt of communication from the SE above.
Fees of arbitrator shall be dealt in line with existing provisions, by the stock exchange on which the dispute had taken place.
The recognised stock exchanges with nation-wide trading terminals are advised to make necessary amendments to relevant bye-laws for the implementation of the above decision immediately.
SEBI inspection of stock exchanges shall cover implementation of this circular.
The circular is being issued in exercise of powers conferred upon SEBI under Section 11(1) of the Securities and Exchange Board of India Act, 1992.
This circular is being issued in partial modification of SEBI Circular No. CIR/MRD/DSA/24/2010 dated August 11, 2010 and will come into effect from 1st April 2013.
Source: SecMarx — Arbitration Mechanism through Stock Exchanges - Introduction of Automatic Process and Common Pool of arbitrators. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.