SEBI Proposes Major Overhaul: Market Infrastructure Institutions (MIIs) to Lead Grievance Redressal in Bid for Faster Investor Justice

SEBI Proposes Major Overhaul: Market Infrastructure Institutions (MIIs) to Lead Grievance Redressal in Bid for Faster Investor Justice​

SEBI's Framework aims to Streamline Dispute Resolution in Securities Markets​

The securities and exchange board of India (SEBI) has proposed significant changes to the online dispute resolution (ODR) framework governing the Indian securities market. The core change involves shifting the administration of conciliation and arbitration, currently managed by ODR institutions, over to Market Infrastructure Institutions (MIIs). These MIIs include stock exchanges, clearing corporations, and depositories.

This move is intended to dramatically accelerate the process of resolving investor grievances. By transferring these critical functions to MIIs, SEBI aims to ensure a more efficient and swift system for dispute redressal within the market ecosystem.

Empowering MIIs with Increased Regulatory Control​

Under the proposed framework, MIIs will assume several key responsibilities that are currently held by specialized ODR institutions. These responsibilities include empanelling conciliators and arbitrators, formal appointment of these personnel, and overseeing all related dispute proceedings.

SEBI rationale behind this shift is rooted in the increased regulatory oversight MIIs possess. The regulator noted that MIIs have stronger regulatory control over listed companies and market intermediaries. This established authority makes them well-positioned to ensure compliance and effective grievance resolution.

New Mechanisms for Investor Representation​

A key element of the proposed overhaul is the direct involvement of investors in the arbitration process. In a nod towards transparency and fairness, both parties involved in a dispute will be required to suggest preferred names from an approved panel of arbitrators. The MIIs will then proceed with the appointment based on these suggestions.

In contrast, concilators will still be appointed directly by the respective MIIs. This dual approach ensures that specialized institutional oversight remains in place while giving disputing investors a say in selecting their arbitral body.

Streamlining Grievance Pathways and Time Savings​

SEBI has also put forth ideas to streamline the entire grievance redressal process. The regulator proposes allowing complaints that have not been resolved after review by designated bodies under the SCORES platform to move directly into the conciliation stage of the ODR mechanism.

This integration aims to bypass unnecessary procedural delays. SEBI estimates that this proposed structural change will result in a substantial reduction, shortening the overall grievance resolution process by 21 days. The feedback received from MIIs, investors, and various stakeholders has informed these comprehensive changes.