On July 31, 2023, the Securities and Exchange Board of India (SEBI) introduced a circular on ‘Online Resolution of Disputes in the Indian Securities Market.’ This circular outlines the establishment of a common Online Dispute Resolution Portal (ODR Portal), with the Smart ODR Portal (https://smartodr.in) already in operation. But is this a truly smart move for the securities market? Let’s delve into the details.
Who Operates the Smart ODR Portal?
Para 5 of the circular provides, “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 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.”
Further, the terms and conditions of usage of ODR portal states that ODR facility is being provided jointly by National Stock Exchange of India Limited, BSE Limited, National Securities Depository Limited, Central Depository Services (India) Limited and Metropolitan Stock Exchange of India Limited. There is nothing in the terms and conditions about the role of ODR institutions in operation of the portal, also they are not part of the user agreement.
However, Part XII of the terms and conditions provides that users may communicate with the host/other facilitating MIIs for any grievance that he/she experience in connection with the services or the platform, at
Name: Jishnu Veetil | E-mail: [email protected]
The person mentioned above is head of sale at SAMA, an ODR institution. Further, the website of SAMA features that Smart ODR platform created for the securities market is powered by Sama.
However, neither the terms and conditions nor the circular provides any clarity regarding the role of the ODR institutions in the operations of the portal. It may be noted the role of SEBI is limited only to undertake inspection, from time to time in order to ensure proper functioning of ODR Portal.
ODR Institutions: Really Capable?
The circular provides that 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 that harness online/audio-video technologies and have duly qualified conciliators and arbitrators. The big question is whether these ODR institutions are capable enough to facilitate the ODR process in the securities market. Additionally, there is a lack of regulatory supervision over the functioning of ODR institutions, which raises concerns about liability in cases of potential misuse of sensitive personal and financial data.
Professional Criteria and Fee Structure for Conciliators and Arbitrators :
Schedule D of the circular suggested following factors for empaneling a person as a conciliator or arbitrator by the ODR Institutions:
Person aged between 35 years to 75 years, with qualification in the area of law, finance including securities market, accounts, economics, technology, management, or administration with minimum 7 years of experience in Financial services including securities market; and/ or, Legal services – Certified professionals handling conciliation, and /or arbitration independently; and/or Ex-officials from the Indian financial sector regulators viz., SEBI, RBI, IRDA, PFRDA.
The fees for conciliators are fixed by SEBI at Rs. 4800 for successful conciliation and Rs. 3600 for unsuccessful conciliation. The fees for Arbitrator is also starting at Rs. 4800. These fees are considerably less compared to the suggested requirements for conciliators/arbitrators.
Conclusion: SEBI’s Smart ODR initiative offers a new approach to dispute resolution in the Indian securities market. However, questions remain about the capabilities of ODR institutions, regulatory oversight, and the fee structure for conciliators and arbitrators. The success of this smart move hinges on addressing these concerns effectively.
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