The Characteristics and Institutional Innovation of Securities Arbitration: Conflict and Reconciliation between Voluntary and Mandatory Nature

With the rapid development of the securities market and the establishment of special representative litigation in 2019, the number of securities disputes has sharply increased in China. To efficiently handle securities disputes and protecting investors, the CSRC and the Ministry of Justice formulated the “Opinions on Carrying out Pilot Arbitration in the Securities and Futures Industry in accordance with the Law” in 2021. The FINRA rules and the US Supreme Court’s decision in the Concepcion case have enlightening significance on China’s immature securities arbitration system. This article reviews the historical development and current rules of the securities arbitration systems in China and the US, and compares their voluntary and mandatory regulatory models. To balance different interests, China should not completely copy the US regulatory model on mandatory securities arbitration format clauses. While allowing parties to voluntarily choose arbitration, China should support securities arbitration and adopt the provision of default arbitration. Respecting the autonomy of the parties, China should be more tolerant of securities mandatory arbitration standard clauses and gradually establish a special representative class arbitration system with “implied admission and explicit withdrawal”.