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SEBI decided to compute limitation period for arbitration from the end of the quarter during which the disputed transaction was executed

In a move to help investors by giving them more time to file arbitration applications, the Securities and Exchange Board of India (SEBI) on Wednesday decided to compute the limitation period for arbitration from the end of the quarter during which the disputed transaction was executed. So far, the period was computed from the day the transaction had happened.

In a move to help investors by giving them more time to file arbitration applications, the Securities and Exchange Board of India (SEBI) on Wednesday decided to compute the limitation period for arbitration from the end of the quarter during which the disputed transaction was executed. So far, the period was computed from the day the transaction had happened.

“It has been decided that the limitation period of six months be computed from the end of the quarter in which the disputed transaction was executed,” said SEBI.

Earlier, if the disputed transaction happened on October 1, an investor could have filed for arbitration only till March 31. But now, an investor will have time till June 30 to file the case.

The market regulator took this decision on the recommendation of its secondary market advisory committee.

In addition to this, SEBI said the period could be extended by another three months by the stock exchanges in case the application was delayed for reasons beyond the control of the investor. In such cases, “rejection of the same is not in the interest of investors,” it said.

SEBI said it observed that arbitration applications were being rejected on the grounds of having exceeded the limitation period, without the exchanges going into the circumstances leading to the delay. The stock exchanges could decide on the extension after obtaining documentary proof, it said.

Dinesh Thakkar, chairman and managing director, Angel Broking, said, “The move is positive for investors as it gives them more time to file applications regarding disputed transactions.”

Market players, however, said awareness about arbitration procedures was poor. “Having no knowledge about the process, investors were taking longer time and thereby exceeding the period of six months,” said an executive vice-president of a domestic broking firm who did not wish to be named. On the other hand, brokers had been prompt to file applications, he added.

The step is likely to make brokers cautious. “Broking houses will take a note of this and be careful in dealing with investors,” said Thakkar.

Mohan Natarajan, vice-president at Edelweiss Capital, said, “The step provides more time to investors and eases pressure on them.”

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