Allegations of unfair selection hit Sebi-backed online dispute redressal platform

On December 19, 2022, the Securities and Exchange Board of India (Sebi) floated a consultation paper. In it, the markets regulator explored the possibility of implementing online dispute resolution (ODR) tools to bolster existing investor grievance redressal mechanisms in India’s securities market.

The Indian securities market comprises of two kinds of players—exchanges (NSE, BSE, NCDEX, MCX, and MSEI) and depositories (CDSL and NSDL). Collectively, Sebi refers to these entities as MIIs, or market infrastructure institutions. And while Sebi’s consultation paper stressed that MIIs’ existing grievance redressal mechanisms were “efficacious”, it still proposed that a significant chunk of these processes move online.

This wouldn’t be the first time MIIs employed ODR tools. Indeed, ODR solutions, especially video conferencing, surged in popularity during the pandemic and have since become mainstays for both private companies and public institutions. Sebi, though, wanted MIIs to truly embrace ODR in order to give investors another avenue where they can have their grievances resolved.

Exactly five months after floating the first consultation paper, Sebi floated a second one. This time, it wasn’t just proposing that an ODR mechanism be put in place for MIIs. Instead, it sought to link the Sebi Complaint Redressal System (SCORES)—an online platform that allows investors to file complaints related to the securities market—with the mooted ODR mechanism.