Dispute Resolution on Unauthorized Trading in Indian Securities Market: A Case Study Approach

Abstract

The paper examines the regulatory compliances of the trading rules and regulations of the Stock Exchanges by trading members while serving its clients in the securities market in India. The paper opt ed for a case study approach to study the unauthorised trading practices of trading members on Indian Stock Exchange system and identifie d the nature and complexity of securities market’s misuses and abuses. The paper identifies how trading members are violating and avoiding the compliances of trading regulations of the Stock Exchange. The paper provides empirical evidences and insights how the trading members we re indulging in unauthorised trades and recovering the losses on account of unauthorised trades from the respective clients. The paper finds that these practices are not only violation of trading rules of the Stock Exchange but also unfair and unethical trading practices. The limitation in a case study approach, the research findings and results may lack generalizability. Hence, researchers are encouraged to study results in other countries. This paper provides inputs for the development of appropriate regulatory framework for prevention of unauthorised trading in Indian securities market, curtail s capital market abuses and enables the investor protection. The findings and results provide critical perspectives on regulatory challenges and encourage the regulatory authorities to issue relevant guidelines to stock brokers to prevent executing unauthorised trades for clients. These guidelines will certainly prevent the menace of unauthorised trades and curtail capital market abuses and enhance investor protection.