SEBI Unveils Proposals to Streamline Dispute Resolution Mechanism

The Securities and Exchange Board of India (SEBI) has issued a consultation paper on 21 April, proposing significant changes to the handling of disputes and complaints among market participants. The regulator seeks to streamline processes through greater use of the Online Dispute Resolution (ODR) mechanism, among other regulatory updates. Public feedback on these proposals is invited until 12 May.

Expansion of Direct Referral to ODR Mechanism

SEBI has proposed that certain categories of disputes and complaints may be directly referred to the ODR portal without exhausting previous grievance redressal stages. These cases include disputes involving financial claims equal to or exceeding ₹10 crore, chronic or repetitive disputes, complaints filed by Schedule B entities, and disputes where a trading member seeks debit recovery against a client investor. 

Additionally, disputes where both parties have given consent, or those contested on grounds of time-barring or technical infirmities highlighted during pre-conciliation, are also eligible for direct arbitration referral. 

Traditionally, the ODR mechanism was accessible only after an investor raised a grievance with the concerned market participant and, if unresolved, escalated the matter to SEBI’s SCORES platform. The new proposal seeks to bypass these initial steps under specific circumstances to facilitate faster dispute resolution.

Other Proposed Changes to the Regulatory Framework

Apart from expanding access to the ODR mechanism, SEBI has suggested the introduction of several regulatory amendments. A key proposal is the inclusion of a provision rendering consent given during conciliation proceedings irrevocable. 

Further, SEBI recommends incorporating new regulations that detail the Standard Operating Procedure (SOP) for handling complaints and disputes, aiming to bring greater clarity and uniformity to the redressal process. These measures are intended to ensure efficiency and certainty in dispute resolution among investors, intermediaries, and listed companies, reinforcing the integrity and effectiveness of the market’s grievance redressal framework

Read More: SEBI Proposes Key Reforms for Angel Funds to Boost Capital Flow to Start-Ups!

Conclusion

SEBI’s latest proposals mark an important step towards enhancing the efficiency of dispute resolution in the Indian securities market. By expanding the use of the ODR platform and introducing new procedural safeguards, the regulator aims to provide quicker and more structured redressal avenues for market participants.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.