SEBI Strengthens Online Dispute Resolution Mechanism In The Securities Market

The Securities and Exchange Board of India (‘SEBI’) is set to revamp its dispute resolution mechanism to give investors more control over the securities market. SEBI Chairperson Madhabi Puri Buch announced that the Regulator has amended the rules to allow investors to use Online Dispute Resolution (ODR) mechanism across registered intermediaries and regulated businesses. The proposal was approved by the Board to utilize the ODR mechanism by[1]:

• increasing the effectiveness and accessibility of the existing Market Infrastructure Institutions (MIIs) administered mediation, conciliation, and arbitration to registered intermediaries/ regulated entities and their investors/clients;
  • usage of the ODR mechanism in response to growing investor involvement in the Indian securities market and the emergence of technology-aided dispute resolution frameworks;
  • streamlining the dispute resolution process and adoption of additional steps to ensure award enforcement;
  • permitting holding procedures in a hybrid manner;

The existing partially online mode developed during the COVID-19 pandemic can be greatly improved by effectively utilising tools, technologies, and platforms that enable an end-to-end online experience for investors, intermediaries, mediators, conciliators, and arbitrators in conducting the mediation, conciliation, and arbitration process online. These solutions include automatic case status updates, multimodal communication between the parties, simple appointment and scheduling of arbitrators and mediators, among other features.

The Board also amended the regulations governing Alternative Investment Funds (AIFs) to standardise requirements for investment valuation and dematerialisation of units of Alternative Investment Funds (AIFs), and to enable a balanced approach to Environmental, Social and Governance (ESG), the Board has given its consent to modify the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Mutual Funds) Regulations, 1996. The Board will implement Business Responsibility and Sustainability Report(BRSR) Core to increase trustworthiness. The BRSR Core will contain key performance indicators (KPIs) to obtain reasonable assurance.

Overall, these measures are expected to make the grievance redressal process more simplified, streamlined, and efficient for investors, improving their control and ensuring better transparency over the securities market.

[1]https://www.sebi.gov.in/media/press-releases/mar-2023/sebi-board-meeting_69552.html