Online Dispute Resolution System for Capital Market

In a bid to enhance efficiency and accessibility in resolving disputes arising in the capital market, a new Online Dispute Resolution (ODR) system has been introduced. This online platform involves institutions, conciliators, and arbitrators, and its primary focus is to address disputes related to the securities market. The initiative aims to harness the power of online conciliation and arbitration to provide a streamlined and effective resolution process.

This topic of “Online Dispute Resolution System for Capital Market” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

Implementation and Role of Market Infrastructure Institutions (MIIs)

The Online Dispute Resolution system will be facilitated by Market Infrastructure Institutions (MIIs). These institutions will be responsible for identifying and empanelling independent ODR institutions that have qualified conciliators and arbitrators.

Establishment of a Common ODR Portal

MIIs will collaborate with empanelled ODR institutions to establish and operate a common ODR portal. This user-friendly platform will be the central hub for all dispute resolution activities in the capital market.

Enrolment of Market Participants

All entities involved in the capital market, including listed companies, specified intermediaries, and regulated entities (collectively referred to as market participants), will be required to enrol on the ODR portal. This will ensure that all disputes within the capital market can be addressed efficiently through the online system.

Dispute Resolution Process

The dispute resolution process within the ODR system follows a structured path. When an investor or client has a dispute with a market participant, they will lodge a complaint directly with the respective entity. If the issue remains unresolved, they can escalate the matter through the SCORES Portal, which is an existing complaint redressal system provided by the regulatory body.

If the complaint remains unresolved even after using the SCORES Portal, the investor or client can initiate dispute resolution through the ODR portal. The process will commence with conciliation, where a neutral third party attempts to mediate and facilitate an amicable resolution between the parties. If conciliation is not successful, the dispute will proceed to arbitration, where a neutral arbitrator will make a binding decision based on the evidence and arguments presented.

Role of Security and Exchange Board of India (SEBI)

The introduction and implementation of the Online Dispute Resolution system fall under the purview of the Security and Exchange Board of India (SEBI). As the regulatory body overseeing the capital market, SEBI plays a crucial role in ensuring the effective functioning and compliance of the ODR system.

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