Sebi proposes reforms to online dispute resolution framework for markets

The regulator has proposed shifting dispute handling to market infrastructure institutions, reducing timelines and strengthening investor protection measures

The Securities and Exchange Board of India (Sebi) has proposed a series of changes to streamline the online dispute resolution (ODR) framework in the securities market aimed at improving efficiency, reducing timelines, and enhancing enforceability.

 

A major proposal looks to shift the responsibility for handling dispute resolution from ODR institutions to market infrastructure institutions (MIIs), including stock exchanges and depositories. While retaining a fully technology-driven process, MIIs would manage the entire workflow, applying their closer regulatory oversight over intermediaries and listed entities.

 

Sebi has also suggested revising the appointment process for arbitrators and conciliators. Parties to a dispute would be required to submit preferences from a panel of arbitrators, with MIIs selecting a candidate based on these choices. Conciliators would be appointed directly by MIIs from their empanelled pool.

 

 

To speed up grievance redressal, unresolved complaints on the Sebi’s SCORES platform would be escalated directly to the conciliation stage under ODR after review by designated bodies, cutting the process timeline by 21 days.

 

To address investor concerns, the regulator has suggested giving alternative investment fund (AIF) investors the option to resolve disputes through mechanisms agreed upon in pre-existing contracts, instead of mandatorily using the ODR platform. Sebi has also proposed extending legal protections currently available to AIF investors structured as trusts to those investing through companies or limited liability partnerships, ensuring uniform safeguards irrespective of the fund’s structure.