CIRCULAR
SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131 July 31, 2023
To,
All Recognized Stock Exchanges (including Commodity Derivatives)
All Clearing Corporations
All Depositories
All Stock Brokers
All Depository Participants
All Listed Companies
All SEBI Registered Intermediaries / All SEBI Regulated Entities
Sir / Madam,
Subject: Online Resolution of Disputes in the Indian Securities Market
1. After extensive public consultations and in furtherance of the interests of investors and
consequent to the gazette notification (dated July 3, 2023) of the SEBI (Alternative
Dispute Resolution Mechanism) (Amendment) Regulations, 2023 the existing dispute
resolution mechanism in the Indian securities market is being streamlined under the
aegis of Stock Exchanges and Depositories (collectively referred to as Market
Infrastructure Institutions (MIIs)),1 by expanding their scope and by establishing a
common Online Dispute Resolution Portal (“ODR Portal”) which harnesses online
conciliation and online arbitration for resolution of disputes arising in the Indian Securities
Market.
Investors and Listed Companies/Specified Intermediaries/Regulated entities under the
ambit of ODR
2. Disputes between Investors/Clients and listed companies (including their registrar and
share transfer agents) or any of the specified intermediaries / regulated entities in
securities market (as specified in Schedule A) arising out of latter’s activities in the
1 presently excluding Clearing Corporations and its constituents
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securities market, will be resolved in accordance with this circular and by harnessing
online conciliation and/or online arbitration as specified in this circular. Listed companies
/ specified intermediaries / regulated entities OR their clients/investors (or holders on
account of nominations or transmission being given effect to) may also refer any
unresolved issue of any service requests / service related complaints2 for due resolution
by harnessing online conciliation and/or online arbitration as specified in this circular.
3. Disputes between institutional or corporate clients and specified intermediaries /
regulated entities in securities market as specified in Schedule B can be resolved, at the
option of the institutional or corporate clients:
a. in accordance with this circular and by harnessing online conciliation and/or online
arbitration as specified in this circular; OR
b. by harnessing any independent institutional mediation, conciliation and/or online
arbitration institution in India.
For existing and continuing contractual arrangements between institutional or
corporate clients and specified intermediaries / regulated entities in the securities
market as specified in Schedule B, such option should be exercised within a period
of six months, failing which option as specified in (a) above will be deemed to have
been exercised. For all new contractual arrangements, such choice should be
exercised at the time of entering into such arrangements.
4. Disputes between MII and its constituents which are contractual in nature shall be
included in the framework at a future date as may be specified3 while expressly excluding
disputes/appeals/reviews/challenges pertaining to the regulatory, enforcement role and
roles of similar nature played by MIIs.
Introduction of the common Online Dispute Resolution Portal
5. The MIIs shall, in consultation with their empaneled ODR Institutions, establish and
operate a common Online Dispute Resolution Portal (“ODR Portal”). The MIIs will make
joint efforts to develop and operationalize the ODR Platform. For the purposes of
implementation of this circular, the MIIs shall enter into an agreement amongst
2 Service related complaints shall include non-receipt/ delay of account statement, non-receipt/ delay of bills,
closure of account/branch, technological issues, shifting/closure of branch without intimation, improper service
by staff, freezing of account, alleged debit in trading account, contact person not available, demat account
transferred without permission etc.
3 As and when the same is made operational, in order to avoid conflict of interest, in case of a complaint/dispute
involving a MII or its holding or subsidiary or associate company, the same will not be allocated to that MII and
the ODR Institution empaneled by such MII or to the direct competitor of such MII and the ODR Institution
empaneled by such MII: such dispute will be directed to another MII and the ODR Institution empaneled by it. For
instance, any dispute against NSE shall be allocated to CDSL and in case of a dispute in relation to BSE, the
same be allocated to NSDL and vice versa.
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themselves, which will, inter alia, outline the nature of their responsibilities, the cost of
development, operating, upgradation, maintenance (including security of data of
investors and intermediaries as specified by the Board from time to time) and for
inspection and/or audit of the ODR Platform. The Board may, from time to time,
undertake inspection in order to ensure proper functioning of ODR Portal and MIIs shall
provide complete cooperation to the Board in this regard.
It is clarified that MIIs which are initially excluded from the round robin system (as
described below) are not required to incur any costs for development and maintenance
of the ODR Portal during the period of such exclusion.
6. Each MIIs will identify and empanel one or more independent ODR Institutions which are
capable of undertaking time-bound online conciliation and/or online arbitration (in
accordance with the Arbitration and Conciliation Act, 1996 and any other applicable laws)
that harness online/audio-video technologies and have duly qualified conciliators and
arbitrators. The norms for empanelment of ODR Institutions are specified in Schedule C
of this circular as also the continuing obligations of the ODR Institutions. The ODR Portal
shall have due connectivity with each such ODR Institution as is required for undertaking
the role and activities envisaged in this circular. Such ODR Portal shall establish due
connectivity with the SEBI SCORES portal / SEBI Intermediary portal.
7. All the MIIs shall participate on the ODR Portal and provide investors/clients and listed
companies (including their registrar and share transfer agents) and the specified
intermediaries / regulated entities in the securities market access to the ODR Portal for
resolution of disputes between an investor/client and listed companies (including their
registrar and share transfer agents) and the specified intermediaries / regulated entities
in the securities market, through time bound online conciliation and/or online arbitration.
8. All listed companies / specified intermediaries / regulated entities in the securities market
(collectively referred to as “Market Participant/s”) shall enroll on the ODR Portal within
the timelines as specified at paragraphs 46 and 47 of this circular. The enrollment
process shall also include executing electronic terms/agreements with MIIs and the ODR
Institutions. Facility to register Market Participants into the ODR Portal by utilising the
credentials used for SEBI SCORES portal / SEBI Intermediary portal may be also
provided.
9. All market participants and MIIs are advised to display a link to the ODR Portal on the
home page of their websites and mobile apps.
10. The modalities of the ODR Portal along with the relevant operational guidelines and
instructions may be specified by the Board from time to time.
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Initiation of the dispute resolution process
11. An investor/client shall first take up his/her/their grievance with the Market Participant by
lodging a complaint directly with the concerned Market Participant. If the grievance is not
redressed satisfactorily, the investor/client may, in accordance with the SCORES
guidelines, escalate the same through the SCORES Portal in accordance with the
process laid out therein. After exhausting all available options for resolution of the
grievance, if the investor/client is still not satisfied with the outcome, he/she/they can
initiate dispute resolution through the ODR Portal.
12. Alternatively, the investor/client can initiate dispute resolution through the ODR Portal if
the grievance lodged with the concerned Market Participant was not satisfactorily
resolved or at any stage of the subsequent escalations mentioned in the paragraph 11
above (prior to or at the end of such escalation/s). The concerned Market Participant may
also initiate dispute resolution through the ODR Portal after having given due notice of at
least 15 calendar days to the investor/client for resolution of the dispute which has not
been satisfactorily resolved between them.
13. The dispute resolution through the ODR Portal can be initiated when the
complaint/dispute is not under consideration in terms of the paragraph 11 above or
SCOREs guidelines as applicable or not pending before any arbitral process, court,
tribunal or consumer forum or are non-arbitrable in terms of Indian law.
14. The dispute resolution through the ODR Portal can be initiated when within the applicable
law of limitation (reckoned from the date when the issue arose/occurred that has resulted
in the complaint/date of the last transaction or the date of disputed transaction, whichever
is later).
ODR Portal and allocation system
15. The ODR Portal shall have the necessary features and facilities to, inter alia, enrol the
investor/client and the Market Participant, and to file the complaint/dispute and to upload
any documents or papers pertaining thereto. It shall also have a facility to provide status
updates on the complaint/dispute which would be obtained from the ODR Institutions.
The features and facilities shall be periodically reviewed and upgraded by the MIIs as
well as new features and facilities added from time to time as required by the Board. The
ODR Portal shall be subject to inspection and/or audit for, inter alia, verifying the
adherence to these norms and applicable SEBI regulations, circulars and advisories.
16. A complaint/dispute initiated through the ODR Portal will be referred to an ODR Institution
empaneled by a MII and the allocation system on a market-wide basis will be a round-
robin system to govern the allocation of each such dispute among all such empaneled
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ODR Institution/s subject that for an initial period (as specified by the Board):
a. complaints/disputes arising with a specific trading member for an exchange
transaction or a listed company, shall be referred to the ODR Institution/s empaneled
by the relevant Stock Exchange4, and disputes arising with a specific depository
participant, shall be referred to the ODR institution/s empaneled by the relevant
DepositoryIf the MII has empaneled more than one ODR Institution, then at such level
as well, a round robin system will govern allocation of references among them.
b. Further, Stock Exchanges operating only commodities segment, the ODR Institution/s
empaneled by such Stock Exchange is/are excluded from the market-wide round
robin system. Other conditions in (a) above will continue to apply to such Stock
Exchanges and ODR Institution/s.
c. Further, references to ODR Institutions shall be made after a review of such
complaint/dispute by the relevant MII with the aim of amicable resolution and which
review shall be concluded within 21 calendar days (or such other period that the
Board may specify).
Conciliation
17. The ODR Institution that receives the reference of the complaint/dispute shall appoint a
sole independent and neutral conciliator from its panel of conciliators. Such conciliator
shall have relevant qualifications or expertise (please refer to Schedule D), and should
not be connected with or linked to any disputing party. MIIs shall ensure that appropriate
measures are put in place by regarding appointment of conciliators by the ODR
Institutions.
18. Such conciliator shall conduct one or more meeting/s for the disputing parties to reach
an amicable and consensual resolution within 21 calendar days (unless extended for a
maximum period of 10 calendar days by consent of the disputing parties to be recorded
in writing/electronically) from the date of appointment of conciliator by the ODR
Institution, which shall do so within 5 days of receipt of reference of the complaint/dispute
by the ODR Institution. Apart from attempting to actively facilitate consensual resolution
of the complaint/dispute, the conciliator may consider advising the Market Participant to
render required service in case of service-related complaints/disputes and/or consider
issuance of findings on admissibility of the complaint/dispute or otherwise in case of trade
related complaints/dispute (as the case may be).
19. If the process of conciliation is successful, the same shall be concluded by a duly
executed settlement agreement between the disputing parties. Such an agreement shall
4 For instances where the dispute pertains to an intermediary linked to more than one Stock Exchange/ Depository
(or a company listed on more than Stock Exchange) then the Stock Exchange/ Depository with which the
complaint was escalated becomes the relevant Stock Exchange/ Depository, otherwise it shall be subject to round
robin
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be executed and stamped through an online mode, as permissible in law. When such
agreement requires the Market Participant to pay the admissible claim value to the
investor/client, the MII shall monitor the due payment/adherence to the terms of the
settlement agreement until due receipt by the investor/client and/or performance of the
required terms of settlement agreement.
20. In case the matter is not resolved through the conciliation process within the 21 calendar
days (or within the extended period of 10 calendar days, extended by consent of the
disputing parties):
a. the conciliator should ascertain the admissible claim value of the complaint/dispute
that the conciliator determines is payable to the investor/client and notify the disputing
parties as well as the ODR Institution and the MII of the same. Such determination
should also be made in all claims/complaints/disputes where the monetary value has
not been ascribed by the person initiating the dispute;
b. An investor/client may pursue online arbitration (which will be administered by the
ODR Institution which also facilitated the conduct of conciliation) on or after the
conclusion of a conciliation process when the matter has not been resolved through
such process, subject to payment of fees as applicable for online arbitration;
c. In case the Market Participant wishes to pursue online arbitration (which will be
administered by the ODR Institution which facilitated the conduct of conciliation), then
the Market Participant must deposit 75% of the admissible claim value with the
relevant MII prior to initiation of the online arbitration and make the payment of fees
as applicable for online arbitration. In case the Market Participant fails to deposit the
amount then they may not initiate online arbitration and they may also face
consequences as determined necessary or appropriate by the Stock Exchange and
could also be liable to be declared as not ‘Fit and Proper’ in terms of the SEBI
(Intermediaries) Regulations, 2008 and would be, inter-alia, liable to have their
registration cancelled or their business activities suspended. A listed company that
fails to deposit the amount may also face consequences as determined necessary or
appropriate by the Stock Exchange. On an application made by the investor/client in
this behalf to the relevant MII, the MII may, from the deposit received, release such
amount to the investor/client not exceeding Rs 5,00,000/- (Rupees Five lakhs) or such
sum as may be specified from time to time. On or before release of the said amount
to the investor/client, the MII shall obtain appropriate undertaking/ indemnity / security
in such form, manner and substance from the investor/client to ensure return of the
amount so released, in case the arbitration proceedings are decided against the
investor/client. If the arbitration proceeding is decided against the investor/client,
subject to the terms of the arbitral award, such investor/client should return the
released amounts. If the investor/client fails to return the amount released, then the
investor/client (based on PAN of the investor/client) shall not be allowed to trade on
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any of the Stock Exchanges or participate in the Indian Securities Market till such time
the investor/client returns the amount to the Market Participant. Further, the securities
lying in the demat account(s) or the mutual fund holdings of the investor/client shall
be frozen till such time as the investor/client returns the amount to the Market
Participant. If security had been obtained, the same could be enforced/realised and
adjusted towards the amount required to be returned. In the event, the arbitration
proceeding is decided in favour of the investor/client, subject to the terms of the
arbitral award, the MII shall release the balance deposit held by it (as deposited by
the Market Participant) to the investor/client. The MII shall also monitor the due
compliance by the Market Participant with the terms of the arbitral award.
Arbitration
21. When the investor/client and/or the Market Participant pursue online arbitration, the ODR
Institution shall appoint a sole independent and neutral arbitrator from its panel of
arbitrators within 5 calendar days of reference. Such arbitrator shall have relevant
qualifications or expertise (please refer to Schedule D), and should not be connected
with or linked to any disputing party. In the event that the aggregate of the claim and/or
counter-claim amount exceeds Rs 30,00,000/- (Rupees Thirty Lakhs) or such amount as
the Board may specify from time to time, the matter shall be referred to an Arbitral
Tribunal consisting of three Arbitrators (within 5 calendar days of reference). MIIs shall
ensure that measures are put in place regarding appointment of arbitrators by the ODR
Institutions. In the instance where the parties wish to withdraw from arbitration before the
arbitrator has been appointed then the fees shall be refunded after deducting the
applicable expenses not exceeding Rs 100/- (Rupees One Hundred). However,
withdrawal shall not be permitted after appointment of an arbitrator.
22. Subject to value of claim and/or counter-claim being in excess of Rs 1,00,000/- (Rupees
One Lakh), the Sole Arbitrator or Arbitral Tribunal shall conduct one or more hearing/s
and pass the arbitral award within 30 calendar days (or such other period as the Board
may specify) of the appointment in the matter. When the value of claim and/or counter-
claim is Rs 1,00,000/- (Rupees One Lakh) or below (or such other sum as the Board may
specify from time to time), the Sole Arbitrator shall conduct a document-only arbitration
process and pass the arbitral award within 30 calendar days (or such other period as the
Board may specify) of the appointment in the matter.5 However, the arbitrator, for reasons
to be recorded in writing/electronically , may grant a hearing to the parties to the dispute.
The Sole Arbitrator or Arbitral Tribunal shall be at liberty to extend such time for disputes
exceeding claims and/or counterclaims of Rs 1,00,000/- (Rupees One Lakh) (or such
other sum as the Board may specify from time to time), upto a further period of 30
5 If parties to the dispute do not provide any representation in the arbitral proceedings, the arbitrator may pass
an ex-parte order after giving a notice of 7 calendar days to the concerned non-cooperative party(ies).
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calendar days (or such other period as the Board may specify) and for reasons to be
recorded in writing/electronically, when the matter requires detailed consideration. The
Sole Arbitrator or Arbitral Tribunal may, having regard to the nature of the claim and/or
counterclaim, provide interim relief as may be required for reasons to be recorded after
affording hearing to the parties to the dispute. The parties may make an application under
the relevant section of the Arbitration and Conciliation Act, 1996 for
correction/rectification of the award.
23. Upon the conclusion of the arbitration proceedings and issuance of the arbitral award,
subject to the terms of the arbitral award, when such arbitral award requires payment of
any amount by the Market Participant or performance by it of a certain nature, then such
payment shall be made by the Market Participant within a period of 15 calendar days
from the date of the arbitral award (unless such award requires payment sooner), and/or
performance within such period as specified by the arbitral award. The MII shall monitor
the due payment/adherence to the terms of the arbitral award until due receipt by the
investor/client and/or performance of the terms of arbitral award. In the event, the parties
do not comply with the arbitral award, the relevant MII shall inform the Board regarding
such non-compliance on a periodic basis. Furthermore, the relevant MII shall provide
necessary assistance to the investor/client for enforcement of the arbitral award.
24. Upon the issuance/pronouncement of the arbitral award, the party against whom order
has been passed, will be required to submit its intention to challenge the award under
Section 34 of the Arbitration Act within 7 calendar days. Further, in the course of such a
challenge, if a stay is not granted within 3 months from the date of the receipt of award,
complete adherence to the terms of the arbitral award must be done.
25. If the Market Participant wishes to challenge such an arbitral award, then the Market
Participant must deposit 75% of the amounts payable in terms of the arbitral award with
the relevant MII prior to initiation of the challenge. In case the specified
intermediary/regulated entity fails to deposit the amount then they may also face
consequences as determined necessary or appropriate by the Stock Exchange and could
also be liable to be declared as not ‘Fit and Proper’ in terms of the SEBI (Intermediaries)
Regulations, 2008 and would be inter-alia, liable to have their registration cancelled or
their business activities suspended. A listed company that fails to deposit the amount
may also face consequences as determined necessary or appropriate by the Stock
Exchange. On an application made by the investor/client in this behalf to the relevant MII,
the MII may, from the deposit received, release such amount to the investor/client not
exceeding Rs 5,00,000/- (Rupees five lakhs) or such sum as may be specified from time
to time. On or before release of the said amount to the investor/client, the MII shall obtain
appropriate undertaking/ indemnity / security from the investor/client to ensure return of
the amount so released, in case the challenge is decided against the investor/client. If
the challenge is decided against the investor/client, subject to the judgement of the
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appellate forum, such investor/client should return the released amounts. If the
investor/client fails to return the amount released, then the investor/client (based on PAN
of the investor/client) shall not be allowed to trade on any of the Stock Exchanges or
participate in the Indian Securities Market till such time the investor/client returns the
amount to the Market Participant. Further, the securities lying in the demat account(s) or
the mutual fund holdings of the investor/client shall be frozen till such time as the
investor/client returns the amount to the Market Participant. If security had been obtained,
the same could be enforced/realised and adjusted towards the amount required to be
returned. In the event, the challenge is decided in favour of the investor/client, subject to
the terms of the judgement of the appellate forum, the MII shall release the balance
deposit held by it (as deposited by the Market Participant) to the investor/client. The MII
shall also monitor the due compliance by the Market Participant with the terms of the
arbitral award/judgement of the appellate forum.
Form of Proceedings
26. The ODR Institutions shall conduct conciliation and arbitration in the online mode,
enabling online/audio-video participation by the investor/client, the Market Participant
and the conciliator or the arbitrator as the case may be. The investor/client may also
participate in such online conciliation and arbitration by accessing/utilizing the facilities
of Investor Service Centers (ISCs) operated by any of the MIIs.
27. The venue and seat of the online proceedings shall be deemed to be the place where
the relevant MII has its registered office.
Fees & Charges
28. The costs of the dispute resolution mechanism on the ODR Portal will be borne in the
following manner:
a. There shall be no fees for registration of a complaint/dispute on the ODR Portal.
b. Fees for conciliation process (irrespective of claim or counter-claim value) will be
as under:
Amount in Rupees
Conciliator’s fee (to be collected by ODR Institution
and paid to Conciliator)
- for successful conciliation Rs 4800
- for unsuccessful conciliation Rs 3240
ODR Institution’s fees, in addition to the conciliator’s Rs 600
fees (to be collected by ODR Institution)
Applicable GST, Stamp Duty, etc. on actual
outgoings shall be borne by the concerned Market
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Participant
Such fees may be borne by the MIIs and will be recoverable by them from the
concerned Market Participant against whom the complaint/dispute is raised. Such
fees shall be borne directly by the concerned Market Participant if it is initiating the
dispute process. The Market Participant shall not shift the incidence of such fees to
the investor/client at any time.
Unsuccessful Conciliation: In the event the disputing parties are not able to arrive
at a settlement within the stipulated time (or such extended period as agreed to by
them) it shall be said to be unsuccessful conciliation.
Late Fees: Initiation of conciliation process after six months from the date of
transaction/dispute arising will require payment of Rs 1000/- by the initiator of the
complaint/dispute (whether such initiator be the investor/client or the Market
Participant) and shall be collected by the MIIs and applied as specified by the Board
from time to time.
c. The fees for the arbitration process will be as under:
Rs 0 –1 above above above above Above Rs
lakh * Rs 1 Rs 10 Rs 20 Rs 30 50 lakh
lakh - lakh - lakh - 30 lakh - 50
10 lakh 20 lakh lakh lakh
Arbitrator’s 4800 8000 12000 16000 60000** 120000**
fee (to be
collected by
ODR
Institution
and paid to
Arbitrator)
ODR 600 1000 1500 2000 7500 15000
Institution’s
fees, in
addition to
the
arbitrator’s
fees (to be
collected by
ODR
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Institution)
Applicable
GST, Stamp
Duty, etc. on
actual
outgoings
* This slab will be applicable for service request related disputes also
** Fee for panel of arbitrators shall be split into a ratio of 40:30:30 with the higher
proportion being payable to the arbitrator writing the arbitral award
Such fees will be payable at the time of initiation of the arbitration by the initiator
(whether the investor/client or the concerned Market Participant), and by the person
against whom the arbitration has been initiated. When the person initiating the
arbitration has not specified a claim amount or has specified a lower claim amount,
the admissible claim value as determined by the conciliator shall be reckoned for
arriving at the claim value in such arbitration being initiated.
Such fees have to be deposited at the time of choosing to initiate arbitration through
the ODR Portal within 7 days or such period as specified from time to time. In case
the person against whom the arbitration has been initiated fails to deposit the fee
payable within such period as specified then the person choosing to initiate the
arbitration can deposit the fees payable on such person’s behalf and shall be
recoverable from such person through the arbitration process.
Subject to the terms of the arbitral award, the person who is successful in the
arbitration proceedings shall receive a refund of amounts deposited by such person.
Late Fees: Arbitration initiated after one month of failure of conciliation and upto six
months, the fees payable would be double of the non-refundable fees specified in
the table above. Arbitration initiated after six months by a Market Participant will
require payment of, additional fee of 50% of the fees, specified in the table above
applicable per additional month of delay and which shall be on non-refundable
basis. Such late fees shall be collected by the MIIs and applied in relation to
operationalization and effective functioning of the ODR Platform and for the
purposes as specified by the Board from time to time.
The fees shall be uniform across MIIs, ODR Institutions, conciliators and arbitrators
.
29. All other usage or administrative fees as well as out-of-pocket expenses borne by the
MIIs or the ODR Institutions in the management or operation or use of the ODR Portal
would be subsumed in these fees and would not be separately chargeable.
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Empanelment and Training of the Panel of Conciliator and Arbitrators
30. All MIIs and the ODR Institutions empaneled by the MIIs shall ensure that:
a. The number of conciliators and arbitrators on the panel of the ODR Institutions is
commensurate to the number of references of complaints/disputes received so that
a conciliator / arbitrator / panel of arbitrators handle a reasonable number of
references simultaneously and that all references are disposed of within the
prescribed time.
b. The conciliators and arbitrators on the panel of the ODR Institutions should have
undergone training and certification program/s or possess sufficient experience for
such individual being regarded qualified or expert in online dispute resolution
(conciliation or arbitration) and technology, finance, securities law, securities
product or services, etc. to cater to the specific nature of a given complaint/dispute
arising in the Indian securities market or such programs as specified by the Board
from time to time (including courses provided by National Institute for Securities
Market – NISM). Such training shall be taken on a periodic basis and at least
annually. Initially, all the members of IGRCs or arbitrators who have been at present
approved by the Board shall be eligible to be empaneled by the ODR Institutions.
c. The conciliators and arbitrators on the panel of the ODR Institutions shall be
evaluated annually. MIIs will require the empaneled ODR Institution to submit an
evaluation report to the MII.
d. Information on conciliators and arbitrators on the panel of the ODR Institutions will
be disseminated on the website of each ODR Institution, including brief profile,
qualifications, training and certifications, areas of experience, number of
conciliation/arbitration matters handled, etc.
e. The mode and manner for an individual to be added to the panel of the ODR
Institutions shall be specified by it, including the required experience and/or training
and certifications.
f. The conciliator or arbitrators should be neutral and independent in respect of each
and every matter or reference received by them, and not connected with or linked
to any disputing party in any manner whatsoever.
Roles and Responsibilities of MIIs
31. MIIs shall enter into appropriate agreements with ODR Institutions outlining the role and
responsibilities of each party in adherence to this circular, and also specify mechanism
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for handling and resolution of their inter-se disputes. The MIIs and the ODR Institutions
empaneled by MIIs may also enter into necessary and appropriate contractual
frameworks with the Market Participants, for them and their investors/clients in the Indian
Securities Market, participating on the ODR Portal and in the ODR mechanism as
specified.
32. All MIIs (and the ODR Institutions empaneled by MIIs as applicable) shall enter into
agreements with financial institutions/Banks for opening accounts and effective receipt,
payment and disbursal of any amount including the fees, payments as required to be
made vide the settlement agreement / arbitral awards or at the time of initiating an
arbitration or challenge to an arbitral award, etc.
33. MIIs shall ensure that resolution of complaints/disputes referred on the ODR Portal are
undertaken by the ODR Institutions empaneled by the MIIs within the stipulated timelines.
34. MIIs and the ODR Institutions empaneled by the MIIs, shall maintain Management
Information Systems (MIS) reports, which shall be shared with the concerned Market
Participant so the latter can adequately track timelines of any dispute. The Board may
also require MIIs to furnish MIS reports in such form and on such periodicity as it may
specify.
35. MIIs and the ODR Institutions empaneled by the MIIs, shall maintain relevant records,
including directions/recommendations/orders passed at pre-conciliation, conciliation and
arbitration stage for the period as specified in the extant law, and produced to relevant
authorities as and when required. MIIs shall also ensure, in terms of their internal
processes and contractual arrangements with ODR Institutions, that documents are
adequately preserved, including in cases of change in the ODR Institution.
36. The ODR Portal and the facilities provided by the ODR Institutions will be user-friendly
and accessible online/through audio-video to all the concerned parties and stakeholders,
at all times.
37. The ODR Institutions to whom the dispute is referred and the Market Participant which is
party to the dispute shall provide complete cooperation to the conciliator and/or arbitrator
and/or panel of arbitrators including providing any information required to resolve the
complaint in effective manner and within stipulated timelines.
38. MIIs, ODR Institutions and the Market Participants shall make reasonable efforts to
undertake promotion of investor education and investor awareness programmes through
seminars, workshops, publications, training programmes etc. aimed at creating
awareness about the ODR Portal for the Indian Securities Market.
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39. The MIIs shall lay down or modify their Code of Conduct, outlining the ethical standards
that every party viz. the ODR Institution empaneled by the MIIs, Market Participants, the
conciliators, the arbitrators must follow, and espouse the interests of investors in the
Indian Securities Market, and resolve their complaints/disputes efficiently and in a time-
bound manner.
40. The MIIs and the ODR Institution empaneled by the MIIs shall publish at such frequency
as specified, statistics on the ODR Portal which provide information as to:
a. Aggregate references of complaints/disputes received
b. Aggregate number of complaints/disputes resolved by means of conciliation
c. Aggregate number of complaints/disputes resolved by means of arbitration
d. Aggregate value of claims decided in favour of investors/clients
e. Summary of complaints/disputes on the ODR Portal against each category of
specified intermediary or regulated entity and against listed companies
Responsibilities of the Market Participants
41. All agreements, contractual frameworks or relationships entered into by Market
Participants with investors/clients in the Indian Securities market presently existing or
entered into hereafter shall stand amended or be deemed 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 this Circular.
42. The Market Participants shall promptly attend to all complaints or disputes raised by its
investors or clients in accordance with applicable SEBI rules, regulations and circulars.
The communications shall clearly specify, the availability of the SCOREs portal and the
ODR Portal to the investor/client and that the same could be accessed by such
investor/client if unsatisfied with the response (or the lack thereof) of the Market
Participant.
43. The Market Participants shall duly 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. Due cooperation and coordination with
the MIIs and with the ODR Institutions shall be ensured by the Market Participants.
44. The Board may require the Market Participants to maintain such level of interest-free
deposit with the MIIs or with the concerned designated body identified vide the revised
SCOREs guidelines and shall be such sums that it considers necessary and appropriate
for honouring of any arbitral awards or amounts payable pending initiation of arbitration
or challenge to an arbitral award. The amount of such deposit may vary depending on
the category of Market Participant and may factor in the extent and nature of complaints
or disputes against any specified Market Participant that are observable.
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Timelines for Implementation
45. The provisions of this Circular will be implemented in phases:
46. The first phase shall include:
a. development of the ODR Portal, empanelment of ODR Institutions by the MIIs,
empanelment of conciliators and arbitrators by such ODR Institutions on or before
August 1, 2023
b. registration of Trading Members and Depository Participants on the ODR Portal by
August 15, 2023, and
c. commencement of registering of complaints/disputes against brokers and depository
participants and their resolution on and from August 16, 2023.
47. The second phase shall include:
a. registration of all other Market Participants on the ODR Portal by September 15, 2023
b. commencement of registering of complaints/disputes against all other Market
Participants and their resolution on and from September 16, 2023, and
c. implementation of related processes and requirements envisaged in this Circular shall
be in effect by September 16, 2023.
48. The Market Participants are directed to bring the provisions of this circular to the notice
of the investors/clients and also to disseminate the same on their website.
49. This Circular supersedes the circulars/directions (and /or sections of the same dealing
with mediation, conciliation and arbitration) issued by the Board till date on the subject
matter and such supersession shall be the date of implementation of the first phase or
second phase, as applicable, specified above. For ease of reference, such circulars are
listed below:
a. Circular No. SEBI/HO/MRD1/ICC1/CIR/P/2022/94 dated July 4, 2022
b. Circular No. SEBI/HO/MRDSD/DOS3/P/CIR/2022/78 dated June 3, 2022
c. Circular No: SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/76 dated May 30, 2022
d. Circular No.: SEBI/HO/CFD/SSEP/CIR/P/2022/48 dated April 8, 2022
e. Circular No SEBI/HO/CDMRD/DoC/P/CIR/2021/649 dated October 22, 2021
f. Circular No. SEBI/HO/MRD1/ICC1/CIR/P/2021/625 dated September 2, 2021
g. Circular No. SEBI/HO/MIRSD/DOC/CIR/P/2020/226 dated November 6, 2020
h. Circular No. SEBI/HO/MRD/DDAP/CIR/P/2020/16 dated January 28, 2020
i. Circular No. CIR/CDMRD/DCE/CIR/P/2018/48 dated March 14, 2018
j. Circular No. CIR/CDMRD/DEICE/CIR/P/2017/77 dated July 11, 2017
k. Circular No: CIR/CDMRD/DEICE/CIR/P/2017/53 dated June 13, 2017
l. Circular No: SEBI/HO/MRD/DRMNP/CIR/P/2017/24 dated March 16, 2017
m. Circular No. SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017
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n. Circular No. CIR/CDMRD/DIECE/02/2015 dated November 16, 2015
o. Circular No. CIR/MRD/ICC/30/2013 dated September 26, 2013
p. Circular No. CIR/MRD/ICC/20/2013 dated July 05, 2013
q. Circular No. CIR/MRD/ICC/8/2013 dated March 18, 2013
r. Circular No. CIR/MRD/ICC/ 29 /2012 dated November 7, 2012
s. Circular No. CIR/MIRSD/2/2012 dated February 15, 2012
t. Circular No. CIR/MRD/DSA/03/2012 dated January 20, 2012
u. Circular No. CIR/MRD/DP/4/2011 dated April 7, 2011
v. Circular No. CIR/MRD/DSA/2/2011 dated February 09, 2011
w. Circular No. Cir. /IMD/DF/13/2010 dated Oct 05, 2010
x. Circular No. CIR/MRD/DSA/29/2010 dated August 31, 2010
y. Circular No. CIR/MRD/DSA/24/2010 dated August 11, 2010
z. Circular No. CIR/MRD/DP/19/2010 dated June 10, 2010
aa. Circular No. SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010
50. Notwithstanding such supersession,
a. anything done or any action taken or purported to have been done or taken under
the superseded circulars, prior to such supersession shall be deemed to have been
done or taken under the corresponding provisions of this Circular;
b. the previous operation of the superseded circulars or anything duly done or suffered
thereunder, any right, privilege, obligation or liability acquired, accrued or incurred
under the superseded circulars, any penalty, incurred in respect of any violation
committed against the superseded circulars, or any investigation, legal proceeding
or remedy in respect of any such right, privilege, obligation, liability, penalty as
aforesaid, shall remain unaffected as if the superseded circulars have never been
superseded;
c. Matters or references currently under consideration of the IGRC or in arbitration
(sole, panel or appellate arbitration) shall be disposed of as per the superseded
circulars and within the timelines specified in such circulars;
d. For disputes pertaining to claims against defaulting trading members the same shall
be addressed through the existing mechanism via the Core Settlement Guarantee
Fund (Core SGF); and
e. All matters that are appealable before the Securities Appellate Tribunal in terms of
Section 15T of SEBI Act, 1992 Sections 22A and 23L of Securities Contracts
(Regulation) Act, 1956 and 23A of Depositories Act, 1996 shall be outside the
purview of the ODR Portal
.
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51. The MIIs are directed to:
a. make necessary amendments to the relevant bye-laws, rules and regulations for
the implementation of the above decision immediately;
b. disseminate the aforesaid provisions on their website and bring the same to the
notice of all stakeholders including the Market Participants and investors/clients in
the Indian Securities Market.
52. This Circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 to protect the interests of investors in
securities and to promote the development of, and to regulate the securities market. This
circular is issued with the approval of the competent authority.
53. This Circular is available on the SEBI website at www.sebi.gov.in under the link “Legal >
Circulars”.
Yours faithfully,
S. Manjesh Roy
General Manager
Tel no.: 022- 26449710
Email: manjeshsr@sebi.gov.in
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Schedule A
(See Paragraph 2 of the Circular)
Specified Intermediaries and Regulated Entities
List of securities market intermediaries / regulated entities against whom investors may
invoke the ODR process:
1. AIFs – Fund managers
2. CIS – Collective Investment management company
3. Depository Participants
4. Investment Advisors
5. InvITs - Investment Manager
6. Mutual Funds - AMCs6
7. Portfolio Managers
8. Registrars and Share Transfer Agents
9. REITs – Managers
10. Stock brokers7
6 Including for any claims/complaints/disputes arising on account of Mutual Fund Distributors of the Mutual
Fund AMCs
7 Including for any claims/complaints/disputes arising on account of Authorised Persons of the Trading Members
Page 18 of 24
Schedule B
(See Paragraph 3 of the Circular)
Specified Intermediaries and Regulated Entities
1. Clearing Corporations and their constituents
2. Credit Rating Agency and rating clients
3. Custodians and their clients/FPIs
4. Debenture Trustees and issuers
5. Designated Depository Participant and their clients/FPIs
6. KYC Registration Agency and their clients/intermediaries
7. Merchant Banker and issuers
8. Mutual Funds and Mutual Fund Distributors
9. Proxy Advisory and their clients
10. Proxy advisors and listed entities
11. Registrars and Share Transfer Agents and their clients
12. Research Analyst and their clients
13. Stock brokers and their Authorised Persons
14. Trading Members and Clearing Members
15. Vault Managers and beneficial owners
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Schedule C
Norms for empanelment of ODR Institutions by MIIs and continuing obligations of ODR
Institutions
MIIs role and responsibility:
1. An MII shall empanel one or more ODR Institutions as a service provider and enter into
relevant agreements with such ODR Institution(s) in accordance with guidelines issued
by the Board on outsourcing of activities by stock exchanges, depositories and clearing
corporations (as amended from time to time) and this circular. An MII should ensure
that the primary/first ODR Institution to be empaneled with it, is not empaneled as the
primary/first ODR Institution with any other MII .
2. An MII shall collect requisite information of a ODR Institution desirous of being
empaneled for providing ODR services for the Indian Securities Market. Such
information shall include: copies of registration certificate, memorandum of association
and articles of association/ constitutional documents, rules governing conciliation and
arbitration, PAN, Legal Entity Identifier number, composition of its board of directors,
governing bodies and advisory councils, if any, and details of its shareholders and
investors, and list of its authorised officials / signatories. Changes if any to any of these
may be notified to the concerned MII promptly. An MII may drop an ODR Institution from
its panel, if there is a delay in notifying or if the changes are viewed by the concerned
MII as not conducive to continuance of the ODR institution on the panel.
3. An ODR Institution shall also furnish other credentials that are deemed relevant to the
empanelment process including: details of conciliators and arbitrators empaneled by
the ODR Institution, norms for such empanelment, fees, costs and charges levied for
conduct of online conciliation and arbitration, institutional/corporate clients or other
ecosystems where rendering online conciliation and arbitration, aggregate number of
disputes received for resolution whether for online conciliation or arbitration, aggregate
number of disputes resolved by means of online conciliation and arbitration, aggregate
value of disputes resolved by means of online conciliation and arbitration, types and
nature of disputes resolved by mean of online conciliation and arbitration, technologies,
platform, platform features and facilities in conducting online conciliation and arbitration.
Such credentials shall be furnished at the time of empanelment and thereafter on a
quarterly basis (April/July/October/January).
4. The details of conciliators and arbitrators required to be furnished shall include: unique
count of conciliators and arbitrators trained in the securities market, along with the
education, training and professional qualification, number of years of experience,
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previous experience in conciliation / arbitration including experience in specific types,
natures or sectors, languages conversant with (spoken/written) and other demographic
details such as age, sex, location.
5. MIIs shall ensure that the ODR Institutions eligible for empanelment have the ability to
integrate their own platform/systems with the ODR Portal for requirements and
purposes as specified from time to time, and on or prior to empanelment undertake
necessary integration. MIIs shall also ensure that the ODR Institutions also have
sufficient technologies to ensure due secrecy, confidentiality and cyber-security for the
dataflow between the ODR Portal and its platform/systems, collection of fees and
charges (or its refund) and for the conduct of online conciliation and arbitration. MIIs
shall also ensure the ODR Institution deploys and makes available such features or
facilities on its platform/systems as required by the Board from time to time.
6. MIIs shall ensure that the ODR Institution and its conciliators and arbitrators abide by
the Code of Conduct (Schedule E) and highest standards of independence,
impartiality, ethics and confidentiality as befits conciliation and arbitration, and interests
of Indian Securities Market and with the applicable laws including the Arbitration and
Conciliation Act, 1996.
ODR Institutions’ role and responsibility:
7. An ODR Institution empaneled by an MII should be/become a member of
association/trade body having as its members MII empaneled ODR Institutions for the
Indian Securities Market. Details of such association / trade body shall be furnished to
the MIIs and the Board, and shall include: copies of registration certificate,
memorandum of association and articles of association/ constitutional documents,
PAN, Legal Entity Identifier number, composition of its board of directors, governing
bodies and advisory councils, if any, and details of its members, and list of its authorised
officials / signatories. Such association / trade body shall undertake such activities and
perform such roles and responsibilities as may be specified from time to time.
8. Any complaint received against a conciliator or arbitrator shall be promptly examined
by the ODR Institution and the findings/conclusions/actions taken will be reported to the
MII. MII may conduct its own review into such a process and/or specific matter. Any
complaint against an ODR Institution shall be promptly examined by the MII and post
the findings/conclusions, MII shall take appropriate actions.
9. An ODR institution may seek to be removed as an empaneled ODR Institution after
disposal of all pending references. Further, in the event of a breach by the ODR
Institution of the norms of empanelment specified, and/or SEBI regulations, circulars
and advisories or norms of the MII, the MII may suspend/terminate the empanelment
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of the ODR Institution, without prejudice to its rights to take any further action against
the ODR Institution. No new complaints/disputes will be assigned after the receipt of its
notice to such effect.
10. MII shall ensure that each ODR institution shall abide by the following norms for
furthering transparency and evolving precedents:
a) Publish at pre decided regularity, data regarding disputes assigned, count of
disposal of such references through conciliation, and count of disposal of
references through arbitration (indicating to the extent feasible, decisions in favour
of investors and in favour of intermediaries), which will be available freely to the
public in such form, manner and mode as the Board may specify, and
b) Publish decisions of the arbitrators, redacted or masked to ensure identity of the
parties is not ascertainable, to help develop a database of matters and decisions,
which will be available freely to the public in such form, manner and mode as the
Board may specify.
11. MIIs shall inspect and/or audit the ODR Institution directly or through such person or
firm that it may appoint, for, inter alia, verifying the adherence to these norms and
applicable SEBI regulations, circulars and advisories.
12. MIIs shall ensure that the ODR Institutions abide by the SEBI regulations, circulars and
advisories on online conciliation and online arbitration as applicable. MIIs shall ensure
empaneled ODR institutions shall furnish an irrevocable, unconditional undertaking that
it shall abide by the norms of empanelment specified, and SEBI regulations, circulars
and advisories or norms as may be notified by SEBI and the respective MII from time
to time. The ODR institutions shall also acknowledge through such undertaking that the
grievance redressal and dispute resolution mechanisms have been set up by the Board
as a part of its institutional framework to provide robust dispute resolution processes for
the investors and Market Participants.
13. Any complaints/grievances against the ODR Institutions with respect to their services
pursuant to this circular shall be resolved in accordance with agreements entered into
the MIIs with their ODR Institutions.
14. MIIs shall ensure that the empaneled ODR Institutions have adequate infrastructure,
manpower and resources to assist the former in maintaining compliance with their
responsibilities under paragraphs 31 – 40 of this circular.
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Schedule D
Suggested norms for empanelment of Conciliators and Arbitrators
The following factors are suggested for empaneling a person as a conciliator or arbitrator by
the ODR Institutions:
1. Age: between 35 years to 75 years.
2. Qualification in the area of law, finance including securities market, accounts, economics,
technology, management, or administration.
3. Experience: Minimum 7 years of experience as provided below.
4. Professional experience as outlined below could be considered:
a. Financial services including securities market i.e. Banks, NBFCs, MIIs, other
intermediaries of securities market;
b. Legal services – Certified professionals handling conciliation, and /or arbitration
independently; and/or
c. Ex-officials from the Indian financial sector regulators viz., the Insurance Regulatory
and Development Authority, the Pension Funds Regulatory and Development
Authority, the Reserve Bank of India and the Securities and Exchange Board of India.
5. Knowledge and Skills such as:
a. Knowledge on the functioning of the securities market;
b. Securities Laws and Arbitration & Conciliation laws in India;
c. Proficiency in English language (reading, writing and speaking);
d. Proficiency in one or two regional languages and ability to read/write/speak/all -
required for communication and for effective dispute resolution;
e. Legal drafting and communications skills;
f. Decision making skills required for imparting fair judgement;
g. Understand party psychology and common online behaviours: Diversity and cross-
cultural communication and possessing professional behaviour
7. The Conciliators and Arbitrators should satisfy the following criteria for empanelment:
a. The person has a general reputation and record of fairness and integrity, including but
not limited to (i) financial integrity; (ii) good reputation and character; and (iii) honesty;
b. The person has not been convicted by a court for any offence involving moral turpitude
or any economic offence or any offence against the securities laws;
c. The person has not been declared insolvent and if yes, has not been discharged;
d. No order, restraining, prohibiting or debarring the person, from dealing in securities or
from accessing the securities market, has been passed by the Board or any other
regulatory authority;
e. No other order is passed against the person, which has a bearing on the securities
market;
f. The person has not been found to be of unsound mind by a court of competent
jurisdiction; and
g. The person is financially sound and has not been categorised as a willful defaulter.
Page 23 of 24
Schedule E
Code of Conduct for Conciliators and Arbitrators
The Conciliators and Arbitrators shall:
i. Act in a fair, unbiased, independent and objective manner;
ii. Maintain the highest standards of personal integrity, truthfulness, honesty and
fortitude in discharge of his duties;
iii. Disclose his/her/their interest or conflict in a particular case, i.e., whether any party
to the proceeding had any dealings with or is related to the Conciliator and
Arbitrator;
iv. Not engage in acts discreditable to his/her/their responsibilities;
v. Avoid any interest or activity which is in conflict with the conduct of his/her/their
duties as a conciliatory or arbitrator;
vi. Avoid any activity that may impair, or may appear to impair, his/her/their
independence or objectivity;
vii. Conduct proceedings in compliance with the principles of natural justice and the
relevant provisions of the Arbitration and Conciliation Act, 1996, the SEBI Act,
1992, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996
and the Rules, Regulations and Bye-laws framed thereunder and the circulars,
directions issued thereunder, and the contractual arrangements;
viii. Undertake training courses as may be specified time to time by the Board, including
from NISM;
ix. Endeavour to pass arbitral award expeditiously and within prescribed time;
x. Pass reasoned and detailed arbitral awards; and
xi. Maintain confidentiality with respect to the proceeding and its associated
recordings and only disclose confidential information as required by law or Courts
of competent jurisdiction or legal authority.
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