The Value Proposition of Dispute Resolution for Investor Education - the Investor… · 2017. 8....
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The Value Proposition of Dispute Resolution for Investor Education- the Investor, the Intermediary, the Regulator & A Case Study on Putting it All Together Sujatha Sekhar Naik Chief Executive Officer Securities Industry Dispute Resolution Center IFIE-IOSCO Global Investor Education Conference Istanbul, Turkey 13 June 2016 1
Transcript of The Value Proposition of Dispute Resolution for Investor Education - the Investor… · 2017. 8....
TheValuePropositionofDisputeResolutionforInvestorEducation- theInvestor,theIntermediary,theRegulator
&ACaseStudyonPuttingitAllTogether
SujathaSekharNaikChiefExecutiveOfficer
SecuritiesIndustryDisputeResolutionCenter
IFIE-IOSCOGlobalInvestorEducationConferenceIstanbul,Turkey13June2016
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CharacteristicsofEmpoweredInvestors
AwareEmpoweredinvestorsareabletoaccesstimelyandqualityinformationwithlittleornocost
AbleEmpoweredinvestorsareabletoenterintoandexitfrommarkets,investmentsanddealingswithintermediarieswithminimalfrictioncostorimpediments
AccountableEmpoweredinvestorsareaccountablefortheiractions
Pro-activeEmpoweredinvestorsareabletoexercisetheirrightseffectivelyandequitably, andaccesstotimelyandcosteffectiveavenuesforrecourse
HowADRContributestoInvestorEmpowerment
….tobuild investorconfidencebyproviding accesstoinformation aswellasfacilitatingaccountabilityandpro-activenessinthemarket
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HowADRContributestoInvestorEducation
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IntermediaryInvestor
1 Effectivedeliveryoflearningpoint• Atpointofneed• Inthecontextofreal-timeproblem
3 Betterretentionofinformation/learningpoints
2 Gainsbetterunderstandingofissueathand,theproduct/service,intermediary’sprocess,regulatoryrequirements,ownaccountability&lessons learntfromthedispute
DIFFERENTTYPESOFINVESTORS
• Financial constraints • Limited market knowledge• Unsound judgments• Apathetic
• Experienced, empowered• Taking proactive steps for
redress
HowADRContributestoMarketIntermediaries
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Investor Intermediary
1RiskManagementTool– madeawareofgapsin:-• internalcontrols andpolicies• salespractices,disclosure&conduct• productdevelopment/design• useoftechnology
3 Independent&impartial“voiceofreason”inassessingcomplaints
ReputationManagement&Client Retention• Confidential processà allowsissues tobeaddressed
without‘whitenoise”• Amicableresolution ofissuesà preserve
relationship, contributes toinvestorconfidence andparticipation
• Valuablemarketintelligenceonvalidchallengesfacedbyinvestors
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Possiblelapses
HowADRcanbuildconnectivitybetweenconductandinvestoreducationFeedthroughandimpactoffindingsfromdisputeresolutionprocesstranslatesintobetterqualitydisclosurepoliciesfromproductdevelopment,productrollout,pointofsaleandaftersalepractices...
§ Governanceissues–conflictetc.
§ Internalcontrols&policies
§ Salespractices
§ Disclosures
§ Conduct
HowADRFeedsThroughtoRegulators
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IntermediaryInvestor
1 Support regulatorssupervisoryandinvestorempowermentefforts
2 Contributestomarket&selfdiscipline
Inputprovided
Regulator 3 Provideinsightsonareasofconcernthatmaybesystemicinnatureoremergingtrends
FeedsintoInvestorEducationstrategy- Identificationof
investorvulnerabilities
- Productormarketprocessknowledgegaps
- IdentificationofnecessarypointsofdeliveryofIE
EmbeddingInvestorEducationAtPointOfNeed
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PRESALE POINTOFSALE POSTSALE
• TargetInvestorgroup• Know-Your-Client(KYC)requirements• EnsureProductSuitability• Product&RiskInformationDisclosure• AdvertisingGuidelines• CompetencyofRepresentatives• ConflictOfInterest
Continuous,timely
Disclosures
C ONNEC T IV I T Y O F C ONDUC T & INV E STO R E DUCAT ION
§ ProductDevelopment&Delivery
§ Disclosure§Monitoring
§ UpdateKYC§ SalesPractices/KYC§ Disclosures
I n v e s tm en t l i f e c y c l e
• Disclosure• KYC&ProductSuitability• SalesPractices
AneffectiveADRbodycontributestothisprocess
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DisputeResolutionProcess
Howdisputeresolutionhelpsthemarketasawhole
INPUTPROVIDEDcontributesto
Overallmarketdisciplinethroughincreased
investorempowerment&confidence
Selfdiscipline&internalcontrolsofintermediaries
Periodicreportingrequirement
Supporting regulator’seffortsinbuilding aneffectiveecosystem,supervisory &educationefforts
throughdisputeresolution process
Investors
Members
Communicationofgapsininternal
controlsandconductissues by
intermediaries,positive impactoffindings againstthe
Member
Investoreducationandempowerment
efforts
through
MARKET
RESOLUTIONOFDISPUTES
KeyTake-Aways
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ADRwithMandate
Integralpartoftheinvestorempowerment
ecosystem
Effectivedeliveryofinvestoreducation
Valuablepartofmarketintermediary’sriskmanagementtoolkit
§ Provideseffective,affordableandimpartial expert redressavenueforinvestors
§ MandatedADRbodyprovidesvaluablefeedthrough toregulators,marketintermediaries &investors
§ Contributestomarketandself-discipline§ Contributestoinvestorconfidenceandinformedparticipation
inthemarket
§ Deliveredatpointofneed inthecontextofinvestor’sreal-timeexperience
§ Assuch,learningpointbetterretained
§ Leverageonprocessaspartofriskmanagementtoolkit§ Usefulalert tointermediaryandprovidestheabilityto
addressandmitigategapshighlighted - confidentialenvironmentprovidesspacetodosowithoutwhitenoise
§ Valuableintelligenceonchallengestoinvestorsandofefficacyproductsandprocessesfrominvestor’sperspective
