To improve investor protection and streamline dispute resolution in the securities market, the Securities and Exchange Board of India (SEBI) has released a Draft Circular on April 21, 2025, proposing key amendments to the Master Circular on Online Resolution of Disputes (ODR).
This draft follows feedback received from Market Infrastructure Institutions (MIIs) — including stock exchanges, depositories, clearing corporations — and other stakeholders seeking greater operational clarity.
Here’s a breakdown of the proposed changes and their implications:
Key Amendments Proposed in SEBI’s ODR Framework
1. Inclusion of Depositories under ODR Mechanism
- For the first time, Depositories (such as NSDL and CDSL) have been added to Schedule A of the Circular.
- This means investors can now directly invoke the ODR process against depositories, just like they can against brokers or other intermediaries.
2. Direct Arbitration in Specific Cases
SEBI has proposed a direct entry into arbitration, bypassing conciliation, in the following circumstances:
- Claims equal to or exceeding ₹10 crores
- Chronic and repetitive nature of complaints
- Complaints filed by Schedule B entities
- When trading members initiate recovery from investors
- When both parties consent
- Cases contested as time-barred or legally defective
This aims to save time and effort in cases where conciliation is unlikely to work.
3. Irrevocable Consent in Successful Conciliation
If conciliation is successful, the consent of both parties shall be:
- Electronically and irrevocably accepted
- Binding on both parties
- Terms of settlement shall be Captured in the Conciliation Report
This will ensure enforceability of settlements and prevent post-conciliation disputes.
4. Separate Panels for Conciliators and Arbitrators
ODR institutions must now maintain:
- Distinct panels for conciliators and arbitrators
- A person cannot serve as both — ensuring role independence and reducing bias
This structural separation promotes neutrality and procedural fairness.
5. Broad Standard Operating Procedures(SOP) by MIIs
Inclusion of new provision relating to broad aspects of SOP
- MIIs shall jointly formulate SOP on operational aspects of the ODR Portal and functioning of ODR Institution
- SOP shall not be in contravention of Master Circular or any other SEBI instructions.
- SOP shall provide following aspects:
- Lodging of Complaints: Documents required
- Chronic complaints: Categorization / identification of cases
- Pre-conciliation: Defining the role of MIIs
- Conciliation: Defining the role of conciliator, initiation, format of recording of proceedings, maintain electronic recording
- Arbitration: initiation, format of recording of proceedings
- Payment of Arbitration and Conciliation fees and deposit of admissible claim value determined
- Details and mode of action to be taken against market participants
- Other operational related matters
- The SOP shall be uploaded on the ODR Portal
- SOP shall be reviewed jointly by all MIIs on regular interval
- A report on the same shall be sent to SEBI.
Implications
| Stakeholder | Key Impact |
|---|---|
| Investors | More options to file against depositories; quicker resolutions in large claims |
| MIIs | Responsible for SOP, empanelment, enforcement, regular reporting |
| ODR Institutions | Must split conciliator and arbitrator panels; ensure process documentation |
| Intermediaries | Mandatory compliance with SOP, fee payments, and prompt response to claims |
SEBI’s Call for Public Comments
SEBI has invited all stakeholders — including investors, intermediaries, and legal experts — to submit feedback on the draft circular latest by May 12, 2025. This inclusive approach will help fine-tune the ODR framework before it becomes binding.
The link for giving comments/ suggestions can be accessed here.
Conclusion
SEBI’s April 21, 2025 consultation paper demonstrates a clear intent to modernize the securities market dispute resolution system with efficiency, fairness, and investor protection at its core.
With inclusion of depositories, streamlined arbitration, irrevocable conciliation, and SOP-driven enforcement — the ODR mechanism is evolving into a powerful tool for investor confidence and systemic integrity.
Have thoughts on these changes?
Drop your insights in the comments or write to us — we’re closely tracking SEBI’s regulatory roadmap and helping clients stay ahead of the curve.
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