PSX probes dispute over Rs8m payment

Investigating case involving such large amount for first time

KARACHI:

Pakistan Stock Exchange (PSX) has invited investors to its ‘arbitration platform’ to resolve their outstanding trade disputes with stockbrokers, as it has initiated a probe against a complaint worth Rs8 million.

“This marks the first time the platform is investigating a case of such a large amount in its history,” a highly reliable source told The Express Tribune. The disputed amount in the case is more than enough to acquire a licence to become a stockbroker at the bourse, it was learnt.

Individual investors usually approach the arbitration platform to resolve disputes with their stockbrokers. But in this case, a securities broker has approached the platform, alleging one of his clients (investor) has disputed the due payment. The case may land in a court of law if any of the two parties to the dispute find the arbitrator’s decision unsatisfactory.

“Arbitration is a process of dispute resolution where customers can settle their broker-dealer disagreement efficiently outside the court,” PSX Chief Regulatory Officer Ajeet Kumar said in a notification on Thursday.

PSX stockbrokers and officials stated that the arbitration platform had been in place for several years. The objective of the latest notification is to inform those who are new to the stock market and are not aware of the platform.

An official said the platform is there to resolve disputes like a broker has made unauthorised sale and/or purchase of stocks through his client sub-accounts or if the broker has placed wrong buying and selling orders (including stock names, quantity of shares and price). Stockbrokers are strictly bound to maintain records placed through email, phone and messaging.

PSX Rule Book, updated in February 2022, reads “the sole arbitrator/ sub-panel of arbitrators shall not take cognizance of any claim or dispute which is not referred to it within three years(s) from the date it arose”.

“Provided that a claim may be admitted after the lapse of three years but not more than 10 years if the investor is able to demonstrate that the delay was due to reasons beyond his control,” it added.

“The arbitration platform receives on an average 15-20 such cases in a year,” the official revealed. “The number of arbitrators to hear and decide the dispute depends on the disputed amount. Where the complaint is above Rs500,000, the dispute shall be referred to the panel of arbitrators (of not more than four officials), otherwise it will be referred to a sole (single) arbitrator,” the notification reads.

Any party dissatisfied with the decision of the arbitrator(s) may file an appeal to the chief regulatory officer (CRO) of PSX, within 15 working days from the receipt of the award (decision).

The application shall be heard and decided by the appellate panel within 45 days of its receipt.

“Later on, the dissatisfied parties have the right to approach Securities and Exchange Commission of Pakistan (SECP) and a court of law at last,” the official remarked.

“The arbitration platform is meant for investors’ protection. The platform can also be approached to resolve a dispute among two or more securities brokers in addition to between investors and brokers,” he added.

“Any trade-related dispute of customers with their securities’ brokers that arises in connection with any trade/ transaction or subscription of securities offered through initial public offer (IPO), which are not settled amicably, can be referred for arbitration by filing an application to the Regulatory Affairs Division (RAD), supported by relevant documentary evidence,” the notification reads.

Published in The Express Tribune, December 25^th, 2022.

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