ONLINE
DISPUTE RESOLUTION BY SEBI - ECONOMY
News: How the online dispute resolution
system announced by Sebi will work
What's
in the news?
● To
enhance the grievance redressal process, SEBI has announced the launch of an
Online Dispute Resolution (ODR) mechanism.
Online
Dispute Resolution (ODR) Mechanism:
● It
seeks to widen the scope of the existing
investor protection framework.
● Investors
who were previously dissatisfied with the outcome of their complaints could
approach the Investor Grievance
Redressal Committee (IGRC).
● However,
ODR will enable investors to initiate mediation and arbitration against a
broader range of intermediaries, thereby making the process more comprehensive
and inclusive.
Features:
● Investors
must first register their complaints on the SCORES platform, where they can
escalate the matter in a time-bound manner.
● ODR
will cover a wide array of intermediaries, including Alternate Investment Funds
(AIFs), investment advisors, mutual funds, portfolio managers, research
analysts, and more.
● Market infrastructure institutions
(MIIs) like stock exchanges and depositories will appoint
ODR conciliators and arbitrators to facilitate the resolution process for the
clients.
● There
won’t be any fees for registering a complaint on the ODR portal, the
conciliator (mediator) will charge a fee of ₹4,800 for successful conciliation
and ₹3,240 for unsuccessful conciliation.
● Arbitration fees
will depend on the claim amount.
Challenges:
● Lack of physical presence
can also make it difficult to enforce judgments, as there is no way to
physically seize assets or property.
● Online transactions
can involve parties from different countries, which can create jurisdictional
challenges.
● Parties
may be hesitant to share sensitive information online, which can hinder the
resolution process.
● ODR
platforms rely on technology, which can be vulnerable to technical glitches or
cyber attacks.