New CSE dispute resolution framework
A new dispute resolution mechanism between investors and the stockbrokers developed since 2021 was finally given approval by the stock market regulator recently.
Currently, dispute resolution is carried out at the Colombo Stock Exchange (CSE) and often, is seen as biased and not independent. The CSE appoints a panel for the initial hearing and if the parties involved are not satisfied, the dispute will go to a 3 – member independent committee of the CSE board. The issue many investors have with this is that as the CSE board has a majority of stockbrokers and this committee’s independence is also questioned.
The new mechanism, in the lines of an arbitration where there’s a panel of arbitrators, was given the nod by the Securities and Exchange Commission (SEC) recently, officials said.
The SEC has requested fit and proper criteria to be met by the appointees to this committee. With this, after the dispute is heard by the stockbrokers and the parties are not satisfied, it goes to the CSE Secretariat. If not resolved, the dispute will go to a panel of 10 members of which one or three members can be chosen to hear the dispute. There is another tier where the parties can appeal and there is only one hearing in this instance. “Now, finally, the pending matters can be expedited,” an official said.
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