Are you ready to comply with the Online Dispute Resolution requirements?

Are you worried about the complaints you can receive from your clients as a SEBI registered intermediary?

Are you aware of the process to resolve the complaints?

Do you have the mechanism in place to ensure that you are ready and compliant to handle the SEBI defined process?

Well, this master circular has come to your rescue.

SEBI has issued a master circular on online dispute resolution (ODR) for the regulated entities in the securities market. This circular was issued on August 11, 2023 (updated as on August 4, 2023).

The aim is to streamline the existing dispute resolution mechanism in the Indian securities market and include ODR.

We have tried to cover the basic questions you might have about the ODR process.

Read on –

#1 – What is ODR or ODR portal?

Online Dispute Resolution – as the name suggest is an online process to resolve the grievances and the disputes of the investors received by the SEBI registered intermediaries.  

A common ODR Portal will be established by the Stock Exchanges and Depositories [(collectively referred to as Market Infrastructure Institutions (MIIs)].

A complaint/dispute initiated through the ODR Portal will be referred to an ODR

Institution – consisting of arbitrators and conciliators – empanelled by a MII.

The aim of this portal is to conduct time-bound online conciliation and online arbitration for resolution of disputes arising in the Indian Securities Market.

#2 – Does the intermediary have to mandatorily refer all the disputes to ODR portal?

No, the intermediary need not refer to ODR for all the grievances or complaints received from the clients or investors.

The following has to be the dispute redressal process –

Step 1 – An investor/client should first take up his/her/its grievance with the intermediary by lodging a complaint directly with the concerned intermediary. The intermediary has to give details on its website where the complaint can be lodged. The intermediary can give name and contact details of the grievance redressal officer.

The Intermediaries have to promptly attend to all complaints or disputes raised by its investors or clients in accordance with applicable SEBI rules, regulations and circulars. The grievances have to be redressed not later than 21 calendar days from the date of receipt of the grievance.

Step 2 – If the grievance is not redressed satisfactorily, the investor/client may, in accordance with the SCORES guidelines, escalate the same through the SCORES Portal.

The details can be accessed only if the intermediary have login credentials for the SCORES portal.

Step 3 – After exhausting these options for resolution of the grievance, if the investor/client is still not satisfied with the outcome, he/she/it can then initiate dispute resolution through the ODR Portal.

The process will enable online/audio-video participation by the investor/client, the intermediary and the conciliator or the arbitrator.

#3 – Does the investor have to follow the process mentioned above or she can directly initiate dispute resolution through the ODR Portal? 

Nothing stops the investor/client to initiate dispute resolution through the ODR Portal if the grievance lodged with the concerned intermediary was not satisfactorily resolved at any stage.

The dispute resolution through the ODR Portal can be initiated when the complaint/dispute is not under consideration as mentioned above or not pending before any arbitral process, court, tribunal or consumer forum.

#4 – Which intermediaries can use the ODR portal?

Schedule A and Schedule B of the circular specifies intermediaries / regulated entities in securities market.

#5 – How can intermediaries use the ODR portal?

The intermediaries have to enrol on the portal by September 15, 2023. Registering of complaints/disputes against all other intermediaries and their resolution will start on and from September 16, 2023.

SEBI may also provide a facility to enrol the intermediaries into the ODR Portal by utilising the credentials used for SEBI SCORES portal / SEBI Intermediary portal.

The intermediaries have to maintain such level of interest-free deposit with the MIIs or with the concerned designated body as may be specified by SEBI.

#6 – How will the investors/ clients know about the ODR portal?

The intermediaries should inform the clients about the availability of the SCORES portal and the ODR Portal and that the same could be accessed by such investor/client if unsatisfied with the response (or the lack thereof) of the Intermediaries in the following ways –

• Notice on website

The Intermediaries should bring the provisions of this circular to the notice of the investors/clients by disseminating the same on their website.

All intermediaries have to display a link to the ODR Portal on the home page of their websites and mobile apps.

Investment Advisers and Research Analyst have to display grievance redressal mechanism available to all investors in the offices as well.

• Changes in client agreements

All agreements and contracts entered into with investors/clients have to be amended to incorporate provision to the effect that the parties agree to undertake online conciliation and/or online arbitration by participating in the ODR Portal and/or undertaking dispute resolution in the manner specified in the said circular.

#7 – Who can address the grievance reported on SCORES or ODR portal?

The Intermediaries have to train their staff in attending to complaints/disputes and in handling the references arising from the SCOREs portal or the ODR Portal, and in participating in online conciliation and arbitration.

The intermediaries can appoint a grievance officer and display the details on the website and in client communication.

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Further details on the ODR process are mentioned in the circular in detail. The ODR process is going to be time consuming process. The arbitration and conciliation process involves fees, costs and charges.

How many intermediaries or investors opt for this – only time will tell.

If you have any queries, you can write to us at compliance@cskruti.com.