Re: Arbitration Mechanism in Stock Exchanges



Members are hereby informed that the SEBI vide its circular no. CIR/MRD/ICC/29/2012 dated  November 7,2012  has advised the Exchange  to incorporate the contents of  the aforesaid circular in its relevant bye-laws, rules & regulations and also bring the contents of this circular to the notice of the members of the Exchange. Accordingly, the contents of the said circular are appended below for information and compliance :-



“The Managing Director/Executive Director,                       CIR/MRD/ICC/ 29 /2012      November 7, 2012


  All Stock Exchanges.



  Dear Madam/Sir,


Subject: Arbitration Mechanism in Stock Exchanges


1.      Reference may be made to circular no. CIR/MRD/DSA/29/2010 dated August 31,2010. In this regard, SEBI has received inputs regarding amount to be deposited by the investors at the time of making arbitration reference. Accordingly, para 7.2 of the circular no. CIR/MRD/DSA/29/2010 dated August 31,2010 is being modified. The para 7.2 of aforementioned circular dated August 31, 2010 shall now read as under:

"7.2 A client, who has claim / counter claim upto Rs. 10 lakh and files arbitration reference, shall be exempt from the deposit. Expenses thus arising with regard to such applications shall be borne by the Stock Exchanges."

2.      The stock exchanges are advised to:-


a.      make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately;

b.      bring the provisions of this circular to the notice of the members of the stock exchange and also to disseminate the same through their website; and


c.      communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Reports to SEBI.

3.      SEBI inspection of stock exchange shall cover implementation of this circular.

4.      This Circular is issued in exercise of the powers conferred under Section 11


(1)   of the  Securities  and  Exchange  Board  of  India  Act  1992, read  with    Section

10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and shall come into effect immediately.

5.   This Circular is available on SEBI website at www.sebi.gov.in.



Yours faithfully,


B K Gupta 




                                                                                                 Dy. General Manager (SEO)