BSE extends arbitration facility to MF distributors

Top stock exchange BSE on Thursday said it will extend its conciliation and arbitration facility to deal with disputes between investors and mutual fund distributors. BSE had provided detailed operating procedure for mutual fund distributors (MFDs) wherein the exchange had decided to extend necessary support for speedy redressal of any disputes. Accordingly, in a circular, BSE said it would "extend conciliation and arbitration mechanism to deal with disputes between investor and mutual fund distributors (MFDs)/mutual fund intermediaries (MFIs) in line with existing practice".

The exchange said all disputes between the investor and MFDs/MFIs shall be referred to conciliation committee. In case conciliation is not possible, the parties could avail of the arbitration mechanism of the exchange. The existing panels of investors grievance redressal committee (IGRC) and arbitrators appointed by BSE only would be eligible to hear matters relating to disputes between investors and MFDs/MFIs.

Additionally, BSE's existing code of conduct and norms would be applicable for disputes related to MFDs/MFIs. However, norms related to setting aside of amounts from deposit of distributors towards any (IGRC)' claim or arbitration award decided in favour of the constituent, would not be applicable to the distributors as they are not required to place any deposit with the exchange. Besides, party filing the arbitration would be required to deposit the arbitration fees, charges and the same would be utilised for payment to arbitrator, irrespective of the outcome of the award.

Moreover, payment from investor protection fund would not be available to MFDs "not implementing the arbitration award". "In case of failure of MFDs to implement the award, the Exchange may take such action against the MFDs, as deemed fit, including de-registration of MFDs," the exchange said.