SEBI’s Online Dispute Resolution | Reimagining Investor Protection & Grievance Redressal

The sixth entry of the Securities Law series by Trilegal discusses in-depth SEBI's involvement in Online Dispute Resolution.


With the introduction of a new framework for online dispute resolution between investors and intermediaries/listed companies, India now boasts of a calibrated, multi-tiered process for investor protection. Inter-se disputes between intermediaries and their clients are a fine balance for regulators across the world; the degree of regulatory supervision has to be greater than the level of regulatory involvement, so as to ensure effective resolution of bi-party disputes without creating a contagion into the regulatory enforcement arena. Over the years, SEBI has introduced and revised the existing mechanisms for protecting investors, including through introduction of a centralised web-based system known as the SEBI Complaints Redress System (SCORES) platform, in 2011. SCORES as a platform has seen considerable success in creating a centralised forum for lodging and resolving disputes, in a manner that allows the regulator maintain oversight while still requiring the intermediary to take ownership of the complaint resolution process. Its success is evidenced by the number of pending actionable grievances which, with the exception of 2020-21, has been steadily declining over the years due to expeditious disposal by SEBI. During 2022-23, 34,752 complaints were received, and 39,062 complaints were redressed, which included 4,290 complaints pending for regulatory action from previous year. Out of the complaints received during 2022-23, 88.1 per cent were e-complaints (i.e., complaints lodged in SCORES). In July 2023 itself, 2,886 complaints were disposed of against 4,014 complaints pending at the beginning of July 2023 and 3,494 complaints received in July 2023.

To build on the success of SCORES as well as leverage on the development of technology over the past decade, the introduction of a version 2.0 was only a matter of time. While web-based systems like SCORES certainly equipped investors to table their concerns, the resolution process was outside the regulator’s purview. A framework for creating a comprehensive online dispute resolution framework was recently mooted through a ‘Consultation Paper on Strengthening the Investor Grievance Redressal Mechanism in the Indian Securities Market by harnessing Online Dispute Resolution mechanisms’ on December 19, 2022 (“Consultation Paper”). In doing so, the Consultation Paper identified several issues in the erstwhile regime on dispute/grievance redressal, including considerable arbitration costs incurred by parties, coordination issues faced in forming a panel of arbitrators and the availability issues of arbitrators for resolution of matters.

Currently, different securities market intermediaries adopt varying modes and manners of resolving investor/client grievances. At times, such variance is also due to the regulations governing the intermediary being silent, or merely prescribing other appropriate arrangements between the intermediary and its constituents for grievance redressal/dispute resolution or stipulating arbitration. The Consultation Paper envisaged a uniform and common redressal mechanism instead of such variety to ease the process for investors, in order to implement recommendations of International Organization of Securities Commissions. To tackle capacity issues, the Consultation Paper proposed that MIIs tie up with one or more ODR institutions for undertaking online mediation/conciliation/arbitration, and also draw upon the mediators, conciliators and arbitrators that such ODR institutions have empaneled.

SEBI now aims to enable an end-to-end online experience for investors, intermediaries, conciliators and arbitrators in conducting the conciliation and arbitration process, which will include multimodal communication between the parties, automatic case-status updates, easy scheduling and appointment of arbitrators, etc.

Taking a cue from MIIs

MIIs had established a 3-step time-bound mechanism for grievance redressal which includes mediation/conciliation undertaken by the Investor Grievance Redressal Committee (IGRC), and if necessary, followed by arbitration (followed by appellate arbitration if required). This mechanism aimed to resolve disputes concerning MIIs’ constituents including brokers, depository participants, and their clients, listed companies, and registrar and transfer agents. The effectiveness of the same was tested especially during the Covid-19 pandemic, when the MII administered mediation/conciliation and arbitration mechanism were conducted in an online mode, using video conferencing tools.

As to complaints/arbitration cases with stock exchanges, about 9,419 complaints were resolved during 2022-23, compared to 11,574 during the previous year. As on March 31, 2023, there were 590 complaints pending with the stock exchanges as against 608 pending complaints as on March 31, 2022. During 2022-23, 341 cases were received by the exchanges for arbitration against trading members as compared to 464 in the previous year. During 2022-23, 354 cases were resolved as against 737 in 2021-22.

The Consultation Paper noted the effectiveness of the MII run grievance redressal process and that the existing online facility could be enhanced further by effectively using the technologies and platforms, thereby strengthening the existing processes and extending the MII administered mediation/conciliation and failing which, the arbitration mechanism, with appropriate guards against any conflict of interest, for resolution of investor/client grievances pertaining to all specified securities market intermediaries, for the sake of consistency, efficiency and effective redressal.

With this, the ODR space in relation to the securities market is now regulated by inter alia the Master Circular for Online Dispute Resolution (“Master Circular”), Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 and guidance issued by the stock exchanges, commodities exchanges and depositories i.e. the Market Infrastructure Institutions (MIIs) from time to time. The Master Circular will be implemented in two phases. As part of Phase I, investors can now register complaints/disputes against brokers and depository participants. Complaints/disputes against all other Market Participants can be registered from September 16, 2023 onwards as part of Phase II.

Snapshot of the ODR Framework

The key cast of characters in the new ODR framework are MIIs, the ODR Institutions and of course, all listed companies / specified intermediaries / regulated entities in the securities market. The Master Circular envisages two frameworks:

i. Mandatory: disputes between Investors/Clients and listed companies (including their registrar and share transfer agents) or any of the specified intermediaries / regulated entities (Market Participants) in securities market (as specified in Schedule A to Master Circular) arising out of latter’s activities in the securities market, will be resolved in accordance with the Master Circular and by harnessing online conciliation and/or online arbitration.

ii. Optional: institutional or corporate clients have the option of resolving disputes with specified intermediaries / regulated entities in securities market (specified in Schedule B to the SEBI Circular):

a) in accordance with the SEBI Circular by harnessing online conciliation and/or arbitration; OR

b) by harnessing any independent institutional mediation, conciliation and/or online arbitration institution in India.

Navigating the ODR process as an investor

Filing a complaint

An investor/client is required to first attempt resolution of the grievance with the Market Participant by lodging a complaint directly. If the grievance is not redressed satisfactorily, the investor/client may escalate the same through the SCORES Portal. If the investor/client is still not satisfied with the outcome after exhausting these options for resolution, she can initiate dispute resolution through the ODR Portal (‘SMART ODR’) -

Alternatively, the investor/client may initiate dispute resolution through the ODR Portal if the grievance lodged with the concerned Market Participant was not satisfactorily resolved or at any stage of the subsequent escalations mentioned in the paragraph above (prior to or at the end of such escalation/s). The concerned Market Participant may also initiate dispute resolution through the ODR Portal after having given due notice of at least 15 calendar days to the investor/client for resolution of the dispute which has not been satisfactorily resolved between them. Complaints can be filed on the ODR Portal by investors through a simple process described on its homepage. There shall be no fees for registration of a complaint/dispute on the ODR Portal.

Market Participants may also initiate dispute resolution through the ODR Portal after giving notice of minimum 15 calendar days to the investor/client for resolution of the dispute which has not been satisfactorily resolved between them.

The Master Circular also specifies the circumstances in which dispute resolution may not be initiated through the ODR Portal, including when the dispute is pending before an arbitral tribunal/court/consumer forum or if liquidation or winding up process has been commenced against the Market Participant. From the same, a question regarding jurisdiction of Securities Appellate Tribunal (SAT) arises. The aim is to include contractual disputes between MIIs and clients , while keeping enforcement issues out of the fray. The law also clarifies that all matters appealable before the Securities Appellate Tribunal, other than  matters  escalated through the  SCORES portal, are outside the purview of the ODR. Dispute resolution through ODR Portal must be initiated within the applicable limitation period. The relevant MII to which the dispute is allocated (on a round robin basis) shall make reference to its empaneled ODR Institutions after a review of such complaint/dispute by the relevant MII with the aim of amicable resolution and which review shall be concluded within 21 calendar days.


A sole independent and neutral conciliator shall be appointed by the ODR institution that receives the reference of the complaint/dispute. One or more meetings shall be conducted by the conciliator within 21 calendar days (unless extended by consent of disputing parties by 10 calendar days) from the date of her appointment. Apart from attempting to actively facilitate consensual resolution of the complaint/dispute, the conciliator may consider advising the Market Participant to render required service in case of service-related complaints/disputes and/or consider issuance of findings on admissibility of the complaint/dispute or otherwise in case of trade related complaints/dispute (as the case may be). If conciliation is successful, a settlement agreement will be executed. However, if it is unsuccessful within the timelines stated above, either party may pursue online arbitration.


If either party decides to pursue online arbitration, a sole independent and neutral arbitrator or a panel of 3 arbitrators (depending on amount of claim or counter-claim) will be appointed by the ODR institution. Parties may not withdraw from arbitration after the appointment of arbitrator(s).

One or more hearings may be conducted depending on the claim/counter-claim value and an arbitral award shall be passed within 30 calendar days of the arbitrator/tribunal’s appointment. If value of claim and/or counter-claim is INR 1,00,000/- (Rupees One Lakh) or below (or such other sum as SEBI may specify), the arbitrator shall conduct a document-only arbitration process but may grant a hearing to the parties. The arbitrator/arbitral tribunal shall have the discretion to provide interim relief to the parties if required. Pursuant to the issuance of the award, if the Market Participant is required to make any payment or undertake performance of a certain nature, then such payment shall be made within 15 calendar days from the date of the arbitral award (unless such award requires payment sooner), and/or performance within such period as specified by the arbitral award.

Further, the party against whom order has been passed, will be required to submit its intention to challenge the award under Section 34 of the Arbitration and Conciliation Act, 1996 within 7 calendar days in the ODR Portal for onward notification to the party/ies in whose favour the arbitral award has been passed and the relevant MII.

Other Key Features

The Master Circular provides a comprehensive framework to ensure that investor is protected at each stage of the process. A few of such features are set out below.

a. In the event a Market Participant wishes to pursue arbitration after determination of admissible claim by the conciliator (in case of unsuccessful conciliation) or appeal the decision of the arbitrator/arbitral tribunal, the former will be required to deposit 100% of admissible claim amount or arbitration amount (as the case may be) with the relevant MII. This is likely to discourage the Market Participant from stretching and elongating a dispute and boost investor confidence.

b. If the Market Participant fails to deposit the amount with the MII as envisaged above, they may be liable to face adverse consequences as determined necessary by the stock exchange/MII including declaration that they are not fit and proper, cancellation of registration or suspension of business activities.

c. The ODR Institutions shall conduct conciliation and arbitration in the online mode, enabling online/audio-video participation by the investor, the Market Participant and the conciliator or the arbitrator as the case may be. However, the investor may also participate in such online conciliation and arbitration by accessing/utilizing the facilities of Investor Service Centers operated by any of the MIIs.

Power & Responsibility

MIIs have been provided a significant responsibility of ensuring that the ODR framework works smoothly. Every MII is required to identify and empanel one or more independent ODR institutions and ensure appropriate measures are in place within such ODR institution with regard to appointment of conciliators and arbitrators. MIIs must collaboratively establish and manage a unified ODR Portal which should be seamlessly connected to the SEBI SCORES portal/SEBI Intermediary portal, and also with each such ODR institution as is required for undertaking the role and activities envisaged in the Master Circular. The functioning of the new system will involve deployment of lot of resources by MIIs. Further, SEBI is going to directly look at MIIs for the operationalisation and implementation of the same.

The ODR Framework would require the MIIs to align their internal procedures to ensure that no investor is prejudiced by the assignment of the forum (pursuant to the ‘Round Robin’ system). This is likely to have the latent effect of each MII conforming with the best practices.

MIIs are required to monitor the adherence to terms of the settlement agreement or the arbitral award, as the case may be, by Market Participants, until performance of the required terms. The MIIs shall inform SEBI in case of non-compliance by the parties with the arbitral award and provide necessary assistance to the investor/client for enforcement of the arbitral award.

MIIs may release a maximum amount of INR 5,00,000/- (from the deposit received from the Market Participant) to the investor/client on an application made in this regard along with necessary undertaking etc. The Master Circular also provides for safeguards if the investor/client fails to return the amount released when the arbitration or challenge to the arbitral award is decided against the investor/client.

For an initial period to be specified by SEBI, MIIs are required to review complaints/disputes before references to ODR institutions are made.

The concept of alternative dispute resolution is not a new one for dealing with securities market related issues, and other jurisdictions have implemented it variable success (including France, Australia and Italy). However, India is arguably the first country to take active assistance and to a certain extent delegate the responsibility of grievance redressal in relation to all securities market intermediaries to MIIs. Stock exchanges and depositories were understood to be essential in creation and development of a strong market for securities. By this move, their responsibilities now include active protection of investors making them a market watchdog.


This forward-looking approach leverages technology to ensure a more efficient, transparent, and accessible process for resolving conflicts. The process, inter alia, places the investor/client at the forefront, offering a structured and time-bound approach to address grievances and ensure their rights are protected.

Clearly, the architecture for the ODR platform is meant to be an evolving one, that will take shape and modify based on an on-going evaluation of its usability and overall success. By adopting this, SEBI has deepened demand for non-litigious resolution mechanisms in the securities market and hopefully flagged off a parallel, simplified process that provides viable outcomes to investors while also easing up the pendency pipeline before judicial forums. It also creates a skin in the game for the complainant and the relevant Market Participant (with SCORES being a more passive communication exchange) and compels both parties to come to the table. This creates a structure which is inherently time-bound and a process that will self-select and eliminate disputes which are vexatious, motivated or being used as a dilatory tactic.

Shruti Rajan is a Partner, Anurag Gupta is a Senior Associate and Pranvi Jain is an Associate at Trilegal.

This is the sixth article in the Securities Law series by Trilegal.

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