A friend, Gaurang, lost physical share certificates that his late father had held in a listed company. The shares were worth about ₹2 lakh, well below the ₹5 lakh threshold prescribed by Securities and Exchange Board of India (Sebi) circulars for simplified transfer based on an undertaking. When he applied for duplicate certificates and transfer, the company’s registrar and transfer agent (RTA) insisted on death certificates of his mother and paternal grandmother, treating them as potential legal heirs, even though both had passed away decades earlier. Gaurang pointed to the specific Sebi circular permitting such cases to be resolved based on an undertaking, but the RTA relied on general clauses allowing it to conduct “such due diligence as it deemed necessary” and maintained this position even on Sebi’s grievance redressal platform, Sebi Complaints Redress System (SCORES). Gaurang escalated the matter to Sebi’s Smart Online Dispute Resolution (Smart ODR) platform, where an arbitrator resolved it in a single sitting and directed the RTA to issue the duplicate certificates.
This episode came to mind when I read the draft Securities Market Code (SMC), which proposes a Securities Market Ombudsman with appeals to the Securities Appellate Tribunal (SAT). Before asking whether a new ombudsman is the answer, it is worth examining what the existing Smart ODR system does — and what it does not.
Smart ODR has worked well, resolving about 75 per cent of the 11,000 disputes referred to it within three months of filing. It has enabled disputes to be resolved far faster than courts, without requiring Sebi to decide individual cases. Operating independently of intermediaries, it allows disputes to be decided on facts and law and reduces pressure on judicial and appellate forums. In cases like Gaurang’s, it has delivered fair and efficient outcomes.
What it lacks is institutional memory. Because arbitration orders are not published, each dispute starts from scratch, with no shared understanding of how similar issues were resolved earlier, and the same questions keep recurring. Different outcomes are not a problem by themselves — any justice system allows room for disagreement — but disagreement adds value only when the reasoning is visible. Without that visibility, arbitration becomes a one-off solution rather than a system that improves over time. Arbitration without publication is like a justice system with amnesia: efficient in the moment, wasteful in the long run.
Sebi requires publication of the arbitration orders in anonymised form. If implemented, this would gradually bring clarity to recurring grey areas and reduce repeat disputes. Over time, market practices would align with how such issues are resolved, encouraging better upfront compliance and clearer expectations for investors. Published orders would also make it easier to identify common problem areas and emerging trends, allowing regulatory intervention where needed. None of this requires a change in the regulatory framework; it only requires implementing what already exists.
This brings us back to the SMC, which proposes a Sebi-run ombudsman for the securities market, with appeals to the Securities Appellate Tribunal (SAT). Ombudsman systems play an important role in high-volume consumer sectors such as banking, but they resolve complaints one at a time. Without publication of anonymised orders, even such systems struggle to build a memory of past decisions or reduce repeat disputes. In the securities market, where grievances often arise from differing interpretations of regulatory grey areas, a repository of past orders becomes particularly important.
A securities market ombudsman would require significant manpower within Sebi, and the proposed appeal route would add to the already heavy workload of the Securities Appellate Tribunal (SAT), raising the risk of systemic overload if large volumes of retail grievances flow through the system.
Truth be told, Gaurang’s case shows that Smart ODR already works well for resolving individual disputes. What is missing is not another forum, but the routine publication of anonymised orders so that the same disputes do not keep resurfacing. Any new ombudsman would face the same requirement. The real reform, therefore, lies not in creating new institutions, but in making the existing, Sebi-mandated Smart ODR system work as it was designed to.
The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor; X: @harshroongta
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