Procedures for Allowing Clients’ Access to Internet Based Trading System (IBTS)

 

Definitions

 

Futures Contract: A futures contract involves purchase and sale of securities at some future date (normally within one calendar month), at a price fixed today. The number and names of companies to be traded on the Futures contract are determined every six months based on the eligibility criteria approved by the SECP in this regard and which are notified to the market participants in advance.

 

Future Market: Future market means where future contracts are traded on daily basis and settled on monthly basis. A Futures contract involves purchase and sale of securities at some future date (normally within one calendar month), at a price fixed today.

 

Haircut: means the percentage rates on which the eligible forms of collaterals are discounted for valuation purpose.

 

Index: A stock index or stock market index is a measurement of the value of a section of the stock market. It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.

 

Investor: means a person trading in the Securities on the Exchange Trading Systems through a Broker under the terms and conditions specified in these Regulations.

 

Limit Order: means an order to buy or sell a security at a specified price. This is the default order type for all single option, spread and stock orders. Because the limit order is not the market order therefore, it may not be executed if the price stated by the investor cannot be met during the tenure in which the order is left open.

 

Market Order: An order to purchase or sell an investment straightaway at the best available existing price is said to be Market Order. Market order assures an execution, but do not guarantee a price or time of execution. Market Order does not contain restrictions on the price or the time frame in which the order can be executed.

Margin Eligible Security: means the securities that are acceptable to the National Clearing Company of Pakistan Ltd. (NCCPL) for the purpose of Exposure Margins and any other margins from time to time, except Marked-to-Market Losses and Special Margins.

 

Marked-to-Market Losses: means the difference between the transaction price of the unsettled Position of an NCC Participant in each security and the Closing Price of such security at the end of each Business Day.

 

Marketable Lots: means minimum tradable lot size of the NCSS eligible securities as prescribed by the Company in its Procedures based on the methodology as notified by the Stock Exchanges.

 

Ready Delivery Contract Market: means a market where Ready Delivery Contracts are traded or the market where trades are settled on rolling settlement basis, based on actual delivery.

 

Settlement Date: means the date on which the delivery of and payment for Securities is due as per Clearing and Settlement Calendar issued by the NCCPL pursuant to Procedures.

 

Stop Loss Order: An order that is placed for the intention of selling a security when it achieves a certain price is called as Stop Loss Order. Stop loss order opens or closes a position by buying or selling in case the market rises or falls respectively. The stop price for buy orders is placed above the current market price whereas for sell orders, it is placed below the existing market price. A stop order turns into a market order when the stop price is triggered, so the closing execution price or time of a stop order cannot be guaranteed. 

 

Stop Limit Order: And order which has the features of both stop order and that of limit order is termed as Stop Limit Order. This order is executed at a specified price or, after a given stop price has been achieved. Once the stop price reaches, the stop limit order turns into a limit order to buy (or sell) at the limit price.

Trade Date: means the date on which the Exchange trade was entered into between a buying and a selling Clearing Member.

 

Transaction Price: mean the price at which the trade is executed on the Exchange Trading System.

 

 

What is a Stock Exchange?

 

A stock exchange is a place where shares of different listed companies are bought and sold through the brokers also known as Trading Right Entitlement Certificate (TREC) Holders of the stock exchange. The stock exchange itself does not indulge in trading of shares, but it regulates the trading activities being done by the brokers on their own as well as on their clients’ behalf.

 

How Securities are traded in the stock exchange?

 

An investor first needs to choose a broker through whom he wants to trade with and enter into broker-client agreement whose features reduce the chances of any dispute on terms and conditions which relate to placement of order, trade confirmation, brokerage charges by a broker and delivery of securities and payments.

 

When an investor decides to buy shares in a particular company, he contacts his broker. Investor can place an order to buy a fixed number of shares, or shares up-to a certain value.

For selling, again the investor contacts his broker. The stock broker is obliged to sell at the best price he can get, but an investor can decide what should be the minimum price he is prepared to accept. Stock broker assists the investor in buying and selling of shares at best price but in no way he is under any obligation to supervise the investment or to advice or to make any recommendation to the investor/clients with respect to the sale/purchase of shares. Electronic trading terminals are used to buy and sell securities.

Following Terms & Conditions Exclusively Governing the IBTS will apply in addition to other Terms & Condition of the Standardized Account Opening Form (SAOF)

 

1.       The Account Holder may avail the IBTS Facility, which may be provided by the Broker, and place orders through online terminal/mobile terminal on the risk and responsibility of the Account Holder.

 

2.       IBTS will act as a link between the Account Holder and the Broker for the purpose of buying and selling securities.

 

3.       The Broker may issue a password/PIN to the Account Holder that will allow the Account Holder to access the IBTS facility. The password/PIN may be communicated in person or through email or any courier to the Account Holder at his/her/their own risk. The Account Holder shall not disclose the password/PIN to any person and shall take every reasonable precaution to prevent discovery of the password/PIN by any other person. The Account holder shall immediately change the password/PIN as soon as it is received from the Broker as the Broker shall not be responsible if the Account Holder does not change the password/PI N immediately after it is received from the Broker.

 

4.       If the password/PIN is disclosed to any third party the Account Holder should immediately notify the same to the Broker. The Account Holder will immediately notify of any loss, theft or unauthorized use of his/her/their account number and password/PIN.

 

5.       The Broker may electronically transfer the delivery of confirmations, statements and other notices in connection with electronic/internet trading. It shall be the responsibility of the Account Holder to review, upon receipt of emails, confirmation statements, notices, margin and maintenance calls whether delivered by mail, email or electronic terminal at the discretion of the Broker.

 

6.       The Account Holder shall fully assume all risks connected and involved with electronic/internet trading. Neither the Broker nor any of the directors or officers of the Broker would be responsible or liable in any manner for any losses or damages that may be suffered by the Account Holder including those due to misuse of the Account Holder’s password/PIN, hacking of lines, outages and slow-downs in the internet connection and piracy of Account Holder information and affair by unscrupulous person.

 

Trading Margin Requirements & Margin Calls

 

The Account Holder is required to deposit the 40% initial margin in form of cash/securities. A maintenance margin of 30% will be required to be maintained at all times. If the maintenance margin falls below 30% limit due to price fluctuations or otherwise, a Margin Call is sent to the Account Holder through any mode of communication (Written/Verbal) and the Account Holder is bound to deposit additional margin in form of cash/securities within the time frame given by the Broker. If the Account Holder fails to deposit the additional margin within the time frame given by the Broker, the Broker shall have the absolute discretion to, and without further notice to the Account Holder, liquidate the Account Holder’s outstanding positions, including the securities purchased and carried in such account, so that the margin is maintained at the required level and any liability arising due to this action shall be settled by the Account Holder immediately.

 

To undertake any positions in Futures, including Provisional Trading under the Futures Contract the Account Holder shall place with the Broker a margin as indicated above. The Margin shall be payable 50% in cash and 50% in shape of securities acceptable to the Broker and the Exchange.

 

Placement & Execution of Orders

 

By using the IBTS facility, the Account Holder can place orders through Online Terminal/Mobile Terminal provided by the Askari Securities Ltd. (ASL). The system provides all information with respect to prices etc. and account status on the real time basis. Under normal market conditions/circumstances, orders are placed and confirmed within a second. A delay in placing and confirming of order may occur due to size of order, abnormal market conditions, type of order placed or internet problem.

 

Mode and timing of reporting of the trade confirmation

 

The orders are confirmed by the trading terminal/mobile terminal immediately after their execution, however, written trade confirmations are disseminated to the clients, through their email addresses, by the automated system within five hours after the closure of the trading session of the stock market.

 

Entry of Quotes and Orders

 

Quotes and Orders are entered in the Stock Exchange through the Order Entry Window of the Electronic Trading Terminals, provided to the brokers, of the exchanges. Following information is required to be entered into the Order/Quote Entry Windows:

The process continues as long as the incoming order remains executable. If not executed upon entry, an order is held in the central order book. All executions are subject to the restrictions of the Market Order Matching Range. Market orders have the highest priority for matching.

 

Manner in which orders are accepted, processed, settled and cleared via the internet

 

Order placed by the client through his/her online terminal/mobile terminal goes to the trading server of the Askari Securities Ltd (ASL). Then it is filtered by the state of the art Risk Management System (RMS) that verifies the cash and securities position of the concerned account. If accepted by the RMS, the order is placed directly to the Trading System of the Stock Exchange for its execution. This whole process in completed in less than a second.

 

If the order is executed it is incorporated in the client’s account immediately. Pending orders appear on the trading screen (if not cancelled) till the closure of the stock market trading session. At the end of the trading session unexecuted orders are cancelled automatically by the system. Pending orders can be modified at any time during the trading session. Orders placed, executed, pending, cancelled or modified appear on the trading screen for the information of the client.

 

Mechanism for Placing Orders in case of System Outages and Failure

In case of system outages and failure the client can place, modify or cancel orders through his/her designated trader via recorded telephone lines. Such orders are placed through the Automated Trading System of the Stock Exchange being provided to the brokers by the exchange.

Procedure for the Cancellation of Pending Orders during a System Failure

In case of any dis-connectivity of the Trading Terminal of Askari Securities Ltd (ASL) the client needs to contact the back-office personnel of the ASL for the cancellation of pending orders (if required).

 Mechanism for shifting of Internet Protocol (IP) in case the Trade Link of PSX is down:

Askari Securities Ltd (ASL) is using two parallel links for the connectivity with PSX.  There is an automatic mechanism for the transfer of Trade Link from one IP to another in case the PSX link is down.  The user does not need to do anything with his system. The link is switched from one IP to another within no time. The live IP addresses are contained in terminal.ini file.

 

Client Broker Relationship

 

Brokers’ Conduct of Business:

 

i.         A broker shall provide brokerage services to an investor only after ensuring that an account has been opened in the investor’s name using an account opening form that is to be developed by the stock exchanges in consultation with the Securities and Exchange Commission of Pakistan.

 

ii.       A broker shall not recommend to an investor the purchase or sale of a security that is unsuitable given the investor's age, financial situation, investment objective and investment experience. Without limitation, investment in a particular type of security may be considered unsuitable or the amount or frequency of transactions may be excessive and therefore unsuitable for a given investor.

 

iii.     A broker shall not guarantee investors that they will not lose money on particular securities transaction, making specific price predictions, or agreeing to share in any losses in the investor 's account.

 

iv.     A broker shall not purchase or sell securities in an investor's account without the investor’s approval, unless the investor has given written discretionary authority to effect transactions in the account.

 

v.       A broker shall not trade on his own behalf or on behalf of his brokerage firm in preference to an investor by trading ahead of a limit order from an investor.

 

vi.     A broker shall not remove funds or securities from an investor 's account without the investor’s prior authorization.

 

vii.    A broker shall not purchase or sell a security while in possession of material, non-public information regarding an issuer.

 

viii.  A broker shall not misrepresent material facts concerning an investment. Examples of information that may be considered material and that should be accurately presented to an investor inter alia include: the risks of investing in a particular security; the charges or fees involved; company’s financial information or any other material information.

 

PSX Regulations Governing Investors’ Claims, Brokers’ Disputes and Arbitration

 

18.1.      PERMANENT ARBITRATION PANEL:

18.1.1. RAC shall form a permanent Arbitration Panel (referred to as “Panel” in this chapter) which shall consist of a minimum number of forty five members. The membership of the Panel shall include TRE Certificate Holders as advisors, senior management staff of the Exchange and industry experts. Provided TRE Certificate Holders should not be more than fifteen and industry experts should not be less than thirty. Provided further that the industry experts shall include advocates, professional accountants or other persons having knowledge or experience in the field of law, trade, commerce, industry, arbitration, securities market or the fields ancillary to the stock market i.e. CDS, NCSS, etc. in accordance with procedures laid down by the Exchange from time to time and subject to concurrence from the Commission.

The list of members of the Panel shall be displayed on the Exchange’s website and updated on quarterly basis. The list shall also contain the details of companies with which all members of the panel have any association.

18.1.2.   From the Panel, following will be the constitution of Arbitrators for arbitrations for the resolution of the disputes in accordance with their categorization mentioned below:

Sub-Panel:

From the panel, a Sub Panel of Arbitrators shall consist of four members, out of which one shall be the TRE Certificate Holder as an advisor who shall not have any voting rights, two industry experts and one senior member of PSX management as nominated by CRO in consultation with the Managing Director- PSX. The Chairman of the Panel will always be the industry expert.

The TRE Certificate Holder and industry expert shall be selected by drawing lots.

 

Sole Arbitrator:

From the Panel, CRO in consultation with the Chairman or any other member of RAC shall appoint an industry expert as a Sole Arbitrator excluding TRE Certificate Holders on case to case basis.

 

18.1.3.   The CRO shall also nominate any official(s) of the Exchange as the secretary(ies) of the Sub-Panel(s) who shall deal with complaints and Investors’ and Brokers’ disputes.

 

18.2.      DISPUTES TO BE REFERRED TO ARBITRATION:

Whenever any dispute arises between Brokers in terse, or between any of the Brokers and their clients, or between any of the Brokers and their Authorized Agents or between Authorized Agent(s) and their clients in connection with any trade or transaction and is not otherwise settled amicably, it shall be referred to arbitration and shall be dealt with according to the procedure laid down in this chapter.

18.3.      APPLICATION FOR ARBITRATION:

Where a dispute cannot be settled amicably, it must be referred to arbitration. Any party to the dispute may initiate arbitration, in accordance with these Regulations by making an application in writing to the CRO. The applicant shall be required to furnish the following:

(a)      Claim Form duly filled and signed by Investor or Broker or the Authorized Agent(s), as the case may be, along with all supporting documents and annexure as mentioned in the Form.

(b)      In case applicant is not a Broker of the Exchange, he shall give an undertaking to abide by all these Regulations in force for the arbitration, as well as the award of the Sole Arbitrator/Panel of Arbitrators appointed under this chapter of these Regulations.

18.4.      ARBITRATION PROCEDURE:

18.4.1.   SCRUTINY OF APPLICATION:

An application received for arbitration shall be scrutinized in the manner prescribed in the procedures by any official(s) of the RAD designated by the CRO to check whether it is complete in all respects and acceptable for arbitration.

18.4.2. REJECTION OR DISMISSAL OF APPLICATION:

Any application may be rejected or dismissed, if:

(a)      The applicant refuses, neglects or fails to comply with the provisions of any Regulations; or

(b)      The applicant refuses, neglects or fails to carry out any direction issued by the CRO, RAC or the Board; or

(c)       The application is not otherwise in order or in accordance with these Regulations or lacking the adequate documentary evidence after providing reasonable time for submission of requisite documents; or

(d)      The  subject  matter  in  the  dispute  has  arisen  from  a  transaction  not  carried  out  through  the Trading Systems/facilitation of the Exchange or not reported through the interface provided by the Exchange or the transaction is otherwise illegal or private deals between two Brokers.

 

In case of rejection of any application, the Exchange shall, under intimation to the Commission, communicate the reasons for any such rejection to the applicant within 15 days of receipt of application.

18.4.3.   CLAIMS/DISPUTES UP TO FIVE HUNDRED THOUSAND RUPEES:

Claims/disputes of up to five hundred thousand rupees shall be referred for arbitration to the Sole Arbitrator, who may hear and decide the matter.

18.4.4.   CLAIMS OF OVER FIVE HUNDRED THOUSAND RUPEES:

 

Claims of over five hundred thousand rupees shall be forwarded to the Sub-Panel for its action.

 

18.4.5.   LOTS TO BE DRAWN:

(a)      The drawing of lots shall be conducted by the Chairman of RAC or any other member of the RAC nominated by him. The names so selected shall be communicated to the parties to the arbitration within three working days from the appointment.

(b)      In case any valid objection is raised within seven working days by any party to the dispute against appointing any person as an Arbitrator, CRO in consultation with Chairman of RAC may appoint via fresh balloting any person from the Panel as new member of Sub-Panel or appoint Sole Arbitrator in consultation with the Chairman of RAC as the case may be. Provided that such objection on any member of the Sub-Panel/Sole Arbitrator shall be entertained only once.

Provided that lots shall be drawn within thirty days from the date of receipt of any application for arbitration which is to be referred to the Sole Arbitrator or Sub Panel.

(c)       Presence of parties at the time of drawing and/or re-drawing: The parties to the dispute shall be given a notice of a minimum five working days, to remain present personally or through an authorized representative at the time of drawing and/or re-drawing lots before the Chairman of the RAC or any other member of the RAC nominated by him. Provided, that the drawing of lots shall take place at the given time and date even if the party or parties are not present despite of the notice and that the party or parties shall have no objection to drawing of such lots.

Parties to the dispute shall be provided with a list of members of the Panel along with the above notice of drawing and/or re-drawing lots.

(d)   There shall be no objection to an award of the Panel of Arbitrators or the Appellate Bench regarding any change(s) in the composition of the Panel of Arbitrators or the Appellate Bench during the enquiry or appeal.

18.4.6. MEMBER OF THE PANEL BOUND TO ACT AS AN ARBITRATOR:

A member of the Panel whose name has been finalized by the CRO in consultation with Chairman or any other member of the RAC shall be bound to act as an Arbitrator till the announcement of award.

18.4.7. FRESH ARBITRATOR:

In case if one or more Arbitrators refuse, neglect or fail to consider the dispute or give an award, fresh Arbitrator from the Panel shall be appointed by the CRO or any other person nominated by him. However, the Arbitrator(s) who refused, neglected or failed to consider the dispute or give an award shall communicate reasons thereof to the Panel, in writing, within ten days of referral of the dispute to him/them.

Upon receipt of information of non-availability of any such Arbitrator, the Exchange shall immediately inform the complainant of the new Arbitrator(s). The Exchange while intimating name of any alternate Arbitrator(s) to both parties to a dispute may also reconfirm or reschedule the earlier date of hearing or arrange for any re-hearing held earlier by the previous Arbitrators to be reheard;

(a)      Hearing Notice: The secretary of the Sub Panel shall give both parties to the dispute not less than seven days’ notice from the date of receipt of such notice by the parties regarding the date, time and the place appointed for Arbitration.

(b)      Both parties present: If both parties to the dispute are present at the appointed date, time and place, the Sole Arbitrator/Sub Panel shall proceed to hear the matter and to give the award.

(c)       Ex Parte decision on the summary disposal: If the defendant is not present or shows his inability to attend the hearing at the appointed date, time and place for two consecutive times, the Sole Arbitrator/ Sub Panel may hear and decide the dispute ex-parte, and if the party making the complaint has shown his inability to attend or fails to make himself available for hearing at the appointed date, time and place for two consecutive times, the Sole Arbitrator/Sub Panel may dismiss the complaint summarily.

(d)      Remedies at law: The Sole Arbitrator/ Sub Panel may decline to hear the dispute or may dismiss any case and refer the parties to avail their remedies through a Court of Law by recording reasons for the decline or dismissal.

(e)      Equal opportunity to both parties: The parties shall be dealt with on an equal footing. Each of the parties shall be given an equal opportunity to present before the Sole Arbitrator/Sub Panel and explain its point of view verbally or in writing:

(i)        the claimant will be given an opportunity to argue his case first;

(ii)       the defendant will be given an opportunity to respond to the point of representations of the claimant;

(iii)     the claimant will be given an opportunity to respond to the arguments of the defendant after defendant has finished his argument;

(iv)     the Sole Arbitrator/ Sub Panel will not hear any party in the absence of the opposing party, unless the latter party has been given every reasonable opportunity to attend and it has failed to attend;

(v)      the Sole Arbitrator/ Sub Panel will not discuss the case with the parties to the proceedings beyond the normal procedure;

(vi)     the parties may appear at a session in person or through a representative to present and explain their respective claim or to defend verbally or, with the permission of the Sole Arbitrator/ Sub Panel, in writing.

(f)       Decision by majority in cases referred to Arbitrators: All claims/disputes referred to the Sub Panel shall be decided by majority and such decision shall be deemed to be the award (‘Award’) in the arbitration.

(g)       Time for disposal of application: An application received under above provision of this chapter and found acceptable after scrutiny shall be disposed-off within ninety days of its receipt including the award of Sole Arbitrator/ Sub Panel. However, if the application is not disposed-off within the prescribed time due to unavoidable circumstances or reasons beyond control, the specific reasons for the delay shall be communicated in writing to both the parties to the dispute and the Commission. The time extension granted by the CRO or anyone nominated by CRO shall be indicated in the communication, which shall not exceed thirty working days from the expiry date of the prescribed ninety (90) days.

(h)      Fee for making an application for arbitration: The fee for filing an application for arbitration will be submitted by the applicant as follows:

(i)        Rs.2,000/- for dispute having value up to Rs.100,000/-

(ii)       Rs.4,000/- for dispute having value more than Rs.100,000/- and up to Rs.300,000/-

(iii)      Rs.6,000/- for dispute having value more than Rs.300,000/- and up to Rs.1,000,000/-

(iv)     Rs.10,000/- for dispute having value more than Rs.1,000,000/-

Fifty percent (50%) of initial deposited fee will be refunded to the applicant if Award is announced in his favor.

(i)        Entitlement of corporate benefits issued during the dispute: The Award would include provision for any corporate benefits (right shares, dividends and bonuses) issued during the pendency of dispute for the securities for which the application for arbitration has been made. The disputed period would be up to the date on which an Award is honored.

(j)        Time period for retaining arbitration record: Record of proceedings of all meetings, hearings and the evidences on the basis of which the Award was announced shall be retained for at least ten years.

(k)       Time period to comply with the Award: The parties to the dispute shall implement/comply with the Award within fifteen days of announcement by the Sole Arbitrator/ Sub Panel.

 

18.5.      LATE CLAIMS BARRED:

The Sole Arbitrator/ Sub Panel of Arbitrators shall not take cognizance of any claim or dispute which is not referred to it within three year 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.

 

18.6.      APPEAL TO RAC:

18.6.1. A party to a dispute that is dissatisfied with any award of the Sole Arbitrator or the Sub Panels, as the case may be, may appeal to the RAC against such an Award within fifteen working days of receipt of the Award.

RAC may constitute one or more sub panels (hereinafter referred as “Appellate Panel”) consisting of five members for hearing appeals against Awards of the Sole Arbitrator/Sub Panel. RAC may appoint any member of the Arbitration Panel in the said Appellate Panel provided he has not been the Arbitrator of the Award against which appeal has been filed with the RAC. Provided further that Appellate Panel shall not include a TRE Certificate Holder.

18.6.2. A party appealing to the Appellate Panel shall state in writing the point wise objections to the Award of the Sole Arbitrator/ Sub Panel and shall pay a fee of two thousand five hundred rupees being institution fee through cheque in favor of the Exchange in its designated bank account. Further, if the appellant is a Broker, he shall deposit the full amount of Award and deliver the securities or the value thereof at the ruling market price of the securities with the Exchange. If the appellant fails in his appeal, he shall satisfy the Award within seven days of its announcement. In case of his failure to do so, the Exchange shall have the authority to pay the amount of the Award and securities to the respondent on the appellant's behalf. However, the appellant shall still be liable to pay the balance securities/amounts, if any, payable under the Award in appeal. An appeal shall not be entertained if the required fee/award money or securities, if any, is not deposited with the Exchange specially with respect to corporate benefits missed upto the date of order.

18.6.3. The decision of the Appellate Panel shall be announced within forty five days of the receipt of the appeal. However, in case the Appellate Panel is unable to announce the decision within the forty five days period due to unavoidable circumstances or reasons beyond control, the Appellate Panel will seek further time from the Chairman of the RAC, by indicating specific reasons for its inability to announce the decision and the Chairman of the RAC may extend the time but not more than thirty days. However, such extension of time should be forthwith intimated to the Commission.

18.6.4.   The decision of the Appellate Panel shall be final and deemed binding on the parties to the dispute and upon their constituents.

The decision of the Appellate Panel shall be implemented /complied with by the parties in dispute within seven (07) days of its announcement.

18.7.      MEMBERS INVOLVED NOT TO HEAR THE CASE/APPEAL:

A member of the Sub Panel or the Appellate Panel, as the case maybe, shall not be appointed as an Arbitrator or a member of the Appellate Panel, as the case maybe, in a dispute in which he is a party and/or has association with either party, whatsoever. Before arbitration or hearing of appeal, the selected member will give a declaration in writing that he has no conflict of interest in dispute under discussion.

 

 

18.8.      MISCELLANEOUS:

18.8.1. There shall be no objection to an Award of the Sole Arbitrator/ Sub Panel or the decision of the Appellate Panel on the ground that the hearing at which a dispute was enquired into or an appeal was heard was adjourned or that the enquiry was not completed or that the appeal was not finally heard at one meeting. Provided that the Sole Arbitrator/ Sub Panel/ Appellate Panel as the case maybe, shall record reasons for every adjournment, non-completion and non-hearing of appeal.

18.8.2. There shall be no objection to an Award of the Arbitrators or the decision of the Appellate Panel on the ground of substitution of an Arbitrator or any member of the Appellate Panel during the enquiry or appeal. Provided that on any substitution of an Arbitrator or any member of the Appellate Panel, the matter shall be heard afresh by the Arbitrators or the Appellate Panel, as the case may be.

18.8.3.   Three members of the Sub Panel of Arbitrators or the Appellate Panel shall be necessary to constitute a quorum for the purpose of the enquiry or appeal.

18.8.4.   In case the Arbitrators or the Appellate Panel fail to reach a unanimous decision, the decision of the majority will prevail.

18.9.      SUMMARY DISMISSAL AND EX-PARTE DECISION:

If any party to a dispute who has appealed against any Award to the Appellate Panel is not present at the time fixed for hearing the appeal or any adjournment thereof, the Appellate Panel, may dismiss the appeal summarily. However, in case the appellant is present but the respondent is absent, the Appellate Panel may proceed with the appeal ex-parte.

18.10.   SETTING ASIDE EX-PARTE AWARD:

The RAC may, on sufficient cause being shown by any party against whom any ex-parte decision has been announced, set aside such decision and direct the reference or the appeal to be reheard. Sufficient cause for the purpose of this Regulation shall mean and include non-receipt of notice/absence of party from the city/country etc.

 

18.11.   EXTENSION OF TIME:

The Sole Arbitrator/Sub Panel / Appellate Panel, as the case maybe, may for special reasons extend the time for which a reference for Arbitration or an appeal against any Award of the Sole Arbitrator or the Sub Panel may be made whether or not the time for making the same has expired.

 

18.12.   PLACEMENT OF NAME OF DELINQUENT CLIENTS ON THE EXCHANGE WEBSITE:

In case an application is filed for arbitration by a Broker against his client and the Award goes in favor of the Broker, the client shall be liable to pay an amount (debit/margin) to the Broker and the same would be explicitly mentioned in the Award.

In case:

(a)      An Award of the Sole Arbitrator/ Sub Panel has been passed against a client of a Broker and the maximum time to     file an appeal against the Award has elapsed; or

(b)      In case such client of a Broker had filed an appeal in accordance with these Regulations and the Appellate Panel dismissed such appeal; and

(c)       In both cases the client of a Broker failed or refused to abide by or carry out such Award/decision; then the name and other particulars of that client of the Broker shall be placed on the website of the Exchange accessible to Broker by following a procedure. Placement of name of such delinquent client of a Broker on the web interface of the             Exchange shall be without prejudice to the right of the Broker concerned to apply to the court of competent jurisdiction for making the Award a rule of the court and enforce the same through a decree of the court.

Further, the UIN of such client will be black-listed and such person will not be allowed to trade for three years.

 

18.13.   ADMINISTRATION OF OATHS TO THE PARTIES TO THE DISPUTE:

 

The arbitrator shall administer oath to the parties and witnesses before examining them.

 

18.14.  UNDERTAKING BY BOTH PARTIES TO THE DISPUTE/CLAIM:

Both the parties appearing before Sole Arbitrator/ Sub Panel/Appellate Panel shall be required to sign the following undertaking:

(a)      I will say the truth, nothing but the truth and will not try to mislead the Sole Arbitrator/Sub Panel /Appellate Panel;

(b)      I will provide all information asked by the Sole Arbitrator/Panel of Arbitrators/Appellate Panel within such time as may be specified by the Sole Arbitrator/Panel of Arbitrators/Appellate Panel and in case of failure  the Sole Arbitrator/Panel of Arbitrators/Appellate Panel may decide the case on available facts;

(c)       I hereby declare that I shall abide by the award of Sole Arbitrator / Panel of Arbitrators/Appellate Panel, as the case may be, within stipulated time.

 

18.15.   VERIFICATION  OF  INVESTORS’  CLAIMS,  INSPECTION  OF  BOOKS  &  RECORDS  AND  CONDUCTING  OF ENQUIRY:

 

The  Exchange  may  verify  genuineness  of  investors’  claims  against  a  Broker  and  may inspect  books  and records  of  any  Broker  and/or  conduct  enquiry  into  his  dealings  and business affairs and for this purpose may also appoint an auditor selected from the panel of auditors  prescribed  under  the chapter 23 of these Regulations. The cost of audit shall be borne by the concerned Broker/TRE Certificate Holder.