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  • SEBI recently notified the SEBI (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023, and issued a Master Circular for Online Resolution of Disputes in the Indian Securities Market (‘ODR Master Circular’), extending the conciliation and arbitration mechanism administered by Market Infrastructure Intermediaries (‘MII’) to all specified intermediaries/ regulated entities. Prior to this, MII’s dispute resolution mechanism only covered stock-brokers, depository participants, listed companies and registrars and transfer agents. Investors embroiled in disputes with any other intermediary did not have recourse to this mechanism, but the ODR Master Circular extends it to other intermediaries to streamline the dispute resolution process. Further, the erstwhile system was largely physical, with some online adaptations brought about during the COVID-19 pandemic. As a progressive measure and in line with the recommendations of the committee constituted by the Niti Aayog under Justice Sikri, the dispute resolution process will now be online.
  • SEBI has also proposed certain changes to the SCORES mechanism, including reduction in timelines and linking the new SCORES platform with the ODR mechanism. This article covers the key features of the ODR mechanism and certain issues that the industry and intermediaries should be cognizant of.

ODR: An Overview

  • As per the ODR Master Circular, an investor/ client who has a grievance shall:
    • First, lodge a complaint with Market Participants (i.e., listed companies/ specified intermediaries/ regulated entities) directly.
    • In case the grievance of the investor/ client is not addressed/ resolved to their satisfaction, the investor/ client may register their complaint on the SCORES platform.
    • If the client/ investor is still not satisfied with the outcome, they can register themselves on the ODR portal (‘SMARTODR‘) and file a grievance.
    • Alternatively, if the Market Participant fails to resolve the grievance, the investor/ client can initiate dispute resolution through the ODR portal directly and skip the stage of filing the grievance on the SCORES platform.
    • Market Participants can also initiate dispute resolution with a notice of 15 days to the investor.
    • Once a complaint is registered on the ODR portal, it proceeds to conciliation. If the grievance is not successfully resolved through conciliation, arbitration is initiated as per the process laid down in the ODR Master Circular.

Following is a snapshot of the ODR process

  • It may be noted that SEBI’s Circular dated September 30, 2023, on ‘Strengthening of investor grievance handling mechanism through SCORES and linking the new platform with the Online Dispute Resolution Mechanism’ states that investors have the option to approach legal forums, including civil courts, consumer courts, at any point of time.
  • The SMART ODR platform has been operationalised and as per the timelines provided in the Master Circular, the filing of complaints/ disputes against Market Participants on the ODR Portal has also commenced. While conciliation and arbitration will be conducted online, investors/ clients may participate in the same by utilising the facilities of Investor Service Centers (‘ISC’), as set up by the Stock Exchanges. This will ensure that investors/ clients without access to technology are not excluded from the ODR system. The progress of a complaint filed on the ODR portal can be tracked online. With this, investors are likely to get faster outcomes.

Categorising Intermediaries

  • The ODR Master Circular categorises intermediaries/ regulated entities into Schedule A and B. Dispute between investors/ clients AND listed companies (including their registrar and share transfer agents) OR intermediaries/ regulated entities form a part of Schedule A[1], arising out of the latter’s activities in the securities market, will be resolved in accordance with the ODR Master Circular under the ODR Mechanism.
  • On the other hand, disputes between institutional/ corporate clients and intermediaries/ regulated entities form part of Schedule B[2]. Such disputes can be resolved at the option of the institutional/ corporate clientby:
    • Utilising the ODR mechanism as provided in the ODR Master Circular and harnessing online conciliation and/ or online arbitration. OR
    • Utilising any independent institutional mediation, conciliation and/ or online arbitration institutions in India.
  • The above option must be exercised for all existing and continuing contractual arrangements, within six months from the date of the ODR Master Circular (i.e., 31st January 2024). In case of failure to exercise such option, the ODR mechanism shall be deemed as the default option. For new contracts, the choice will be exercised by the institutional/ corporate clientat the time of entering such arrangements.
  • The reading of the ODR Master circular indicates that Market Participants forming a part of Schedule B would have to relook at all existing agreements and provide an option to their institutional/ corporate clients to opt for either the ODR mechanism under the ODR Master Circular or any other independent institution.

Disputes that cannot be initiated through the ODR mechanism

  • Dispute resolution through the ODR mechanism cannot be initiated in the following scenarios:
    • When a grievance is under consideration with either the Market Participant or the SCORES platform.
    • Where a matter is pending before any arbitral process, court, tribunal, or consumer forum or is non-arbitrable. Matters that are appealable before the Securities Appellate Tribunal in terms of Section 15T of SEBI Act, 1992,[3] Sections 22A and 23L of Securities Contracts (Regulation) Act, 1956, and 23A of Depositories Act, 1996.
    • Disputes/ challenges/ reviews/ appeals pertaining to the enforcement and regulatory role of MII.
    • Disputes between MIIs and its constituents, which are contractual in nature, are not yet included in this framework. (Would be included at a future date).


  • To ensure compliance with the ODR Master Circular, trading members and depository participants have to register on the ODR portal. Further, Market Participants are required to relook at their contracts, agreements, or existing relationships with investors/ clients in the Indian securities market to include a provision to the effect that the parties agree to undertake online conciliation and/ or online arbitration by participating in the ODR portal or undertake dispute resolution as specified in the ODR Master Circular. The option available with institutional/ corporate clients of Market Participants that form a part of Schedule B in this regard must be exercised by January 31, 2024.
  • Market Participants are required to bring the provisions of the ODR Master Circular to the notice of investors/ clients and also disseminate the same on their websites. They also must train their staff to handle references arising from SCORES/ ODR Portal. SEBI may require Market Participants to maintain interest free deposits with MIIs as it considers necessary for honoring any arbitral awards.
  • Market Participants will have to face consequences for non-compliance with conciliation agreements and arbitral awards, as determined appropriate by the Stock Exchanges, which could make them liable to be declared as not ‘Fit and Proper’ in terms of the SEBI (Intermediaries) Regulations, 2008.

[1] Includes AIF-Fund Managers, CIS-Collective Investment Management Company, Commodities Clearing Corporations, Depository Participants, Investment Advisors, InvITs – Investment Manager, Mutual Funds – AMCs, Portfolio Managers, Registrars and Share Transfer Agents, REITs – Manager, Research Analyst, Stock Brokers

[2] Includes Clearing Corporations and their constituents, Credit Rating Agency and rating clients, Custodians and their clients/FPIs, Debenture Trustees and issuers, Designated Depository Participant and their clients/FPIs, KYC Registration Agency and their clients/intermediaries,  Merchant Banker and issuers, Mutual Funds and Mutual Fund Distributors, Proxy Advisory and their clients or listed entities, Registrars and Share Transfer Agents and their clients, Research Analyst and their clients, Stock brokers and their Authorised Persons, Stock brokers and their Authorised Persons, Trading Members and Clearing Members, Vault Managers and beneficial owners.

[3] Other than matters escalated through SCORES portal.