When investing in the market subsequent to opening an account with a securities broker, investors must be cognizant of their rights regarding investment in the market. From account opening and maintenance, investment process and procedures, to different caveats regarding investment in the stock market, investors must be careful and ensure that their rights are protected. For example, investors must not invest based on any promise of a fixed return or guaranteed returns by a securities broker; furthermore, investors must not authorize any broker to transact on their behalf or carry out trades without explicit permission or authority by the investor.
Investor Complaints Process & Resolution:
In case of any complaints or trade related dispute, the customer may at first lodge a complaint with his/ her securities broker. If the matter is not resolved, the customer may lodge the complaint with the Regulatory Affairs Division (RAD) of PSX to get relief or compensation. Once an investor files a complaint, PSX takes up the matter with the concerned securities broker and initiates the process of the complaint resolution initially through mediation.
Arbitration:
If the matter still stands unresolved, despite mediation, then Arbitration is employed in accordance with procedures prescribed under Chapter 18 of PSX Regulations. Arbitration is a process of dispute resolution whereby a customer can settle their disagreement with the broker efficiently outside the Court. Any party to the dispute, whether investors alleging mismanagement of their funds or securities brokers for recovery of debit amounts, may file for Arbitration through an application to RAD supported by relevant documentary evidences. If the disputed amount is above RS 500,000, then the Arbitration is carried out by a panel comprising of industry experts, CEOs of brokerage houses, and representatives of PSX senior management staff. The Arbitration panel provides equal opportunity of hearing to all parties involved in the dispute. In case the disputed amount is less than RS 500,000, then the sole arbitrator who may be one industry expert hears and decides on the dispute.
.Default by a Securities Broker:
In case of default by a securities broker, a customer wanting to lodge a complaint against the said securities broker in respect of claiming funds, can do so by contacting the PSX Regulatory Affairs Division (RAD). The process involves formation of a Default Committee by PSX for handling such matters, inviting claims against defaulting securities brokers through PSX website and advertisements in newspapers, appointment of auditor for verification of claims, and disbursement of available funds to approved claimants.
The approved claims of defaulter securities brokers are settled by PSX through liquidation of assets of the securities broker and through the Base Minimum Capital (BMC) maintained with the Exchange in accordance with Chapter 19.
While there are comprehensive measures in place to protect investors by PSX as a frontline regulator, the saying that “prevention is better than cure” or “better be safe than sorry” is the most apt in this situation. Being careful and investing responsibly is the best guarantee that an investor can have in terms of protecting his/ her investment and assets.
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