The Securities and Exchange Board of India (SEBI) has put forth a plan to revamp the online dispute resolution (ODR) framework in the securities market. This initiative aims to enhance efficiency, reduce resolution timelines, and bolster the enforceability of dispute outcomes. SEBI’s proposal involves transferring the responsibility of managing the ODR mechanism from ODR institutions to market infrastructure institutions (MIIs) like stock exchanges and depositories.
Under the new system, MIIs will manage the entire dispute resolution process in a technology-driven manner, utilizing their regulatory oversight over intermediaries and listed entities. SEBI has also recommended changes in the process of appointing arbitrators and conciliators. Parties in a dispute will now select arbitrators from a panel, with the concerned MII appointing an arbitrator based on these preferences. Conciliators, on the other hand, will be chosen directly by the MIIs from their pool of experts.
To expedite the resolution of investor grievances, SEBI has suggested that unresolved complaints on its SCORES platform be directly referred to the conciliation stage under the ODR mechanism after evaluation by designated bodies. This move is expected to trim the overall dispute resolution timeline by 21 days. Additionally, SEBI has outlined modifications for investors in alternative investment funds (AIFs). According to the proposal, AIF investors will have the flexibility to resolve disputes through pre-agreed mechanisms in their contracts rather than mandatorily using the ODR platform.
Moreover, SEBI has proposed extending the existing legal protections for investors in trust-structured AIFs to those investing through company or limited liability partnership (LLP) structures. This extension aims to ensure that investors receive consistent legal safeguards regardless of the fund’s organizational structure.
