SEBI proposes revamp of online dispute resolution framework to speed up investor grievance redressal

Mumbai, July 23 (AHN) The Securities and Exchange Board of India (SEBI) has proposed a comprehensive overhaul of the online dispute resolution (ODR) framework for the securities market, seeking to make the system more efficient, reduce resolution timelines and strengthen the enforceability of dispute outcomes.

In a consultation paper, the capital markets regulator proposed transferring the responsibility for administering the ODR mechanism from ODR institutions to market infrastructure institutions (MIIs), including stock exchanges and depositories.

While the process will continue to remain fully technology-driven, MIIs will oversee the entire dispute resolution workflow, leveraging their regulatory oversight over intermediaries and listed entities.

As part of the proposed changes, SEBI has also suggested revising the process for appointing arbitrators and conciliators.

Under the new framework, parties involved in a dispute would submit their preferences from a panel of arbitrators, following which the concerned MII would appoint an arbitrator based on those preferences.

Conciliators, meanwhile, would be selected directly by the MIIs from their empanelled pool.

To accelerate investor grievance redressal, the regulator has proposed that complaints remaining unresolved on its SCORES platform should be referred directly to the conciliation stage under the ODR mechanism after review by designated bodies.

According to SEBI, the move could reduce the overall dispute resolution timeline by 21 days.

The regulator has also proposed changes for investors in alternative investment funds (AIFs).

Under the proposal, AIF investors would have the option of resolving disputes through mechanisms already agreed upon in their contractual arrangements instead of being required to use the ODR platform.

In addition, SEBI has suggested extending the legal protections currently available to investors in trust-structured AIFs to those investing through company or limited liability partnership (LLP) structures.

The proposal aims to ensure that investors receive uniform legal safeguards irrespective of the organisational structure of the fund.