(Dow Jones) The Securities and Exchange Commission has approved a plan to widen the pool of candidates that potentially could hear an arbitration proceeding.

The SEC, in approving the plan, said the rule change "will protect investors and the public interest by providing investors greater control in the arbitrator selection process," according to the order. It received six comment letters on the proposal, generally favoring the change.

The Financial Industry Regulatory Authority proposed the change in April, saying it would reduce the chance that all arbitrator candidates would be eliminated in the selection process, a circumstance that requires Finra to make random picks.

Cases involving claims of $100,000 or more are heard by a panel of three arbitrators. Generally, the panels include a chairman who must meet certain qualifications, an arbitrator who is affiliated with the securities industry and a public arbitrator who does not have current industry ties.

Parties are given a list of eight candidates for each of those three positions. The proposal would raise the number on each of those lists to 10. That increase "should enhance investor an industry participants' confidence in the arbitration process," the SEC wrote in an order issued Friday.

Each side in an arbitration case can strike up to four candidates from each list. Then each party ranks any remaining candidates, in order of preference. Finra uses those rankings to assign a panel to the case.

With the present eight-candidate list, however, there is a chance that all candidates will wind up struck from the list: four by one side, four by the other. With a 10-candidate list, at least two would remain.

In instances where all candidates are struck, Finra uses a computer system to randomly select arbitrators from its general pool. The random selection process has drawn criticism from participants in the process, the SEC wrote.

Finra typically publishes a regulatory notice within 60 days of SEC approval. Effective dates for rule changes are generally between 30 to 90 days after publication of the notice.

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