The Securities and Exchange Board of India (SEBI) has released a draft circular proposing significant amendments to the Master Circular on Online Dispute Resolution (ODR) in the Indian securities market. Issued originally on July 31, 2023, and revised through the remainder of 2023, this ODR framework was designed to streamline and digitize dispute resolution for investors and market intermediaries. Now, with the benefit of feedback from key stakeholders, SEBI is looking to refine the system further—and it wants the public’s input.
Why This Matters
The Online Dispute Resolution mechanism represents a crucial step in making India’s securities market more accessible, efficient, and investor-friendly. As technology reshapes dispute resolution across industries, SEBI is ensuring that the capital markets ecosystem stays ahead of the curve. These proposed amendments are aimed at clarifying operational guidelines, removing ambiguities, and enhancing procedural fairness for all parties involved.
Key Proposed Changes at a Glance
Here are some of the major inclusions and revisions in the draft circular:
- Depositories Included in ODR Framework
Previously, the ODR system primarily covered stock exchanges and clearing corporations. The new draft proposes the inclusion of Depositories—a significant move that broadens the ODR system’s applicability and ensures greater coverage of investor grievances.
- Direct Arbitration in Certain Cases
Clause 16(d) introduces a mechanism for direct arbitration in specific scenarios. This allows disputes to bypass the conciliation stage under certain conditions, speeding up the resolution process in appropriate cases.
- Irrevocable Consent in Conciliation
Clause 19 emphasizes that consent provided during conciliation will be irrevocable, ensuring finality and trust in the outcome of conciliation proceedings and discouraging parties from backtracking after a settlement is reached.
- Dedicated Panels for Conciliators and Arbitrators
ODR institutions will now be required to maintain separate panels for Conciliators and Arbitrators (Clause 30(c)). This distinction helps ensure better specialization and neutrality in the handling of disputes.
- Standard Operating Procedure (SOP) Guidelines
A new Clause 40A lays down broad aspects of SOPs to be adopted by ODR institutions. These guidelines will help bring consistency and clarity to processes across various platforms.
Call for Public Participation
SEBI has invited public comments on the proposed changes, giving market participants, legal experts, and investors the opportunity to shape the future of dispute resolution in India’s capital markets. The last date for submitting comments is May 12, 2025.
Comments can also be sent via email to ia_ho@sebi.gov.in with the subject: “Public comments on Amendment to Master Circular on Online Resolution of Disputes in the Indian Securities Market.”
