The Securities and Exchange Board of India (Sebi) wants to overhaul its online dispute resolution (ODR) framework to make investor grievance redressal faster, more accountable and easier to navigate.
The proposed revamp would shift the administration of conciliation and arbitration from private ODR institutions to stock exchanges, depositories and other market infrastructure institutions (MIIs), while giving investors a bigger role in choosing arbitrators and tightening timelines.
Mint explains what the changes mean.
Why is the ODR framework important?
The ODR framework is designed to resolve disputes between investors and Sebi-regulated entities, including brokers, depositories and other market intermediaries. Introduced in 2023, it enables conciliation and arbitration to be conducted entirely online.
The mechanism comes into play only after an investor's complaint remains unresolved through Sebi's SCORES grievance redressal platform. If conciliation fails, the dispute proceeds to arbitration, where an award can be challenged in court. Sebi's proposals would reshape how the system is administered, how arbitrators are appointed, the timelines for proceedings and the enforcement of arbitral awards.
What are the proposed changes?
While retaining the framework's digital-first approach, Sebi has proposed shifting the administration of conciliation and arbitration from private ODR institutions to MIIs such as stock exchanges, depositories and clearing corporations. The regulator said these institutions are better placed to oversee the process because they already supervise most market intermediaries and listed entities.
Investors will gain a larger role in selecting arbitrators from approved panels. Unresolved SCORES complaints will move directly to conciliation, reducing delays. Conciliation will remain free for investors, while appellants must deposit award amounts.
Why were the changes needed?
Sebi proposed the changes after feedback from market participants, who flagged delays in appointing and paying conciliators and arbitrators, lengthy proceedings, and weak enforcement of arbitration awards. Existing ODR institutions lack the authority to effectively enforce awards because they do not regulate market intermediaries.
The current ODR institutions are the Centre for Online Resolution of Dispute (CORD), Centre for Alternate Dispute Resolution Excellence (CADRE), Webnyay, Presolv360, Sama, Just Act and Jupitice.
Industry participants said investors often preferred independent arbitration institutions over the ODR framework because of operational bottlenecks. These are neutral bodies that administer disputes outside the court system.
How will this affect the industry?
Industry participants have broadly welcomed the proposals, saying they address operational shortcomings in the existing system. The changes could improve the enforcement of arbitration awards and encourage wider use of the ODR framework.
For investors, the reforms promise quicker resolution through defined timelines, continued access to free conciliation and stronger safeguards. The revised framework would also permit interim relief and require entities appealing an award to deposit the full amount. Investors could receive up to ₹5 lakh or 50% of the award value, whichever is lower, while an appeal is pending.
What else can be done?
Market participants said further reforms are needed to strengthen the framework, particularly for disputes involving overseas parties. They also raised concerns about the quality, independence and specialised expertise of arbitrators.
Experts have recommended widening the pool of arbitrators, introducing specialised training programmes and creating dedicated grievance redressal provisions for foreign entities.
Under Sebi's proposal, conciliators and arbitrators should be between 40 and 75 years of age, have at least 10 years' experience in finance, law or related fields, and possess a sound understanding of securities markets.