The Securities and Exchange Board of India (Sebi) has asked the Market Infrastructure Institutions (MIIs), such as stock exchanges and depositories, to establish a common online dispute resolution portal (ODR Portal) for online conciliation and arbitration to resolve disputes arising in the securities market. The circular issued on July 31, 2023, aims to streamline the existing dispute resolution mechanism in the Indian securities market.
The circular said that the MIIs will make joint efforts to develop and operationalise the ODR Platform. Disputes between investors/clients and listed companies or any specified intermediaries/regulated entities in the securities market will be resolved through the portal. Investors can raise disputes against securities market intermediaries such as AIFs (Fund managers), collective investment management companies, depository participants, investment advisors, InvITs, mutual funds, portfolio managers, registrars, REIT managers and stock brokers.
The MIIs, in consultation with their empanelled ODR institutions, will set up and operate the ODR portal to be connected to the Sebi SCORES portal/Sebi intermediary portal, the circular said.
ODR Institutions & ODR Portal
ODR Institutions are service providers that have a group of conciliators and arbitrators who will do online conciliation and arbitration for a fees.
The ODR Portal will facilitate the enrollment of investors and market participants, allowing them to file complaints and upload relevant documents. It will also provide status updates on the complaints from the ODR Institutions.
There shall be no fees for registration of a complaint/dispute on the ODR Portal. However, once it is taken for the arbitration process, for dispute claims up to Rs 1 lakh, the arbitrator's fee will be Rs 4,800, and the ODR institution's fee is Rs 600. The arbitrator's fee can go up to Rs 1.20 lakh, with ODR institution's fee at Rs 15,000, for dispute claims above Rs 50 lakh.
Dispute Resolution Process
The dispute resolution process through the ODR Portal will start with the investor/client lodging a complaint directly with the concerned market participant. If the grievance is not resolved satisfactorily, the investor/client can escalate the issue through the SCORES Portal as per the guidelines. If the grievance remains unresolved, the dispute resolution process through the ODR Portal can be initiated.
Alternatively, the investor/client can directly initiate dispute resolution through the ODR Portal if the initial grievance with the market participant was not satisfactorily resolved. The concerned market participant can also take this route against the investor after giving a 15-day notice to the investor to resolve the dispute.
To be eligible for dispute resolution through the ODR Portal, the complaint/dispute should not be under consideration through other channels or pending before any arbitral process, court, tribunal, or consumer forum. A complaint/dispute initiated through the ODR Portal will be referred to an ODR Institution empanelled by a MII.
Sebi has asked the parties to develop an ODR Portal by August 1, followed by the empanelment of ODR institutions by MIIs and empanelling conciliators and arbitrators. By August 15, the registration of trading members and depository participants on the ODR Portal should be completed. From August 16 onwards, complaints against brokers and depository participants will be accepted and resolved.
By September 15, the registration of all other market participants on the ODR Portal should be done, Sebi said, adding the registration of complaints against them should start from September 16.