Generated by claude-sonnet-4-6 · 2026-06-15 07:06 · grounding rag
Model Answer
Arbitration is an alternative dispute resolution mechanism provided by a stock exchange for resolving disputes between trading members and their clients regarding trades done on the exchange. If no amicable settlement is reached through the normal grievance redressal mechanism, the investor can apply for Arbitration under the Bye-Laws of the concerned stock exchange.
Source: Chapter 8, Section 8.3 – Clearing & Settlement and Redressal
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Explanation
- The examiner expects two key points: (1) what arbitration is — an alternative dispute resolution mechanism, and (2) when it is used — when normal grievance redressal fails.
- Use the exact phrase "alternative dispute resolution mechanism" as it appears in the textbook.
- Do not confuse Arbitration with the Investor Grievances Cell (IGC) — IGC handles complaints first; Arbitration is the next step.