Sebi Strengthens Arbitration Mechanism in Securities Market

Sebi has proposed a direct arbitration mechanism for certain high-value and chronic disputes in the Indian securities market, aiming to enhance clarity and implementation in the Online Dispute Resolution framework. The proposal includes direct referral to arbitration for claims exceeding Rs 10 crore and repetitive complaints, with public feedback invited.

In a move to enhance the resolution of securities market disputes, the Securities and Exchange Board of India (Sebi) has unveiled a proposed overhaul of its Online Dispute Resolution (ODR) framework. On Monday, Sebi recommended direct arbitration for disputes exceeding Rs 10 crore and chronic or repetitive cases, bypassing the initial conciliation stage entirely.

The proposals suggest formal inclusion of depositories into the ODR system, while mandating market infrastructure institutions to draft a comprehensive Standard Operating Procedure (SOP) covering the function and processes of ODR institutions. The SOP will provide procedural clarity on dealing with complaints, arbitration processes, and compliance measures.

The suggestions also highlighted the importance of separate panels for conciliators and arbitrators, mandating that individuals cannot hold both positions simultaneously. Annual evaluation of these panels is proposed to ensure proficiency and fairness. Public comments on the proposed changes will be accepted until May 12.

(With inputs from agencies.)