The market watchdog has proposed to enhance investors’ grievance handling mechanism through the SEBI Complaints Redressal System (SCORES) by combining it with the recently approved Online Dispute Resolution (ODR) mechanism from the Securities and Exchange Board of India (Sebi).
In March this year, Sebi implemented the ODR. The ODR platform is a way for investors to access the three-step Market Infrastructure Institution (MII) mediated dispute resolution mechanism. Investors opt for this mechanism when they are not satisfied with the solution found through SCORES.
Sebi said in a consultation paper that the connection of the two platforms “aims to make the entire grievance redress process in the securities market more comprehensive by providing an end-to-end solution that makes the entire process more efficient and faster by reducing timelines and introducing auto-routing and auto-escalation.”
In the paper, the market watchdog also suggested that complaints related to issues such as market price manipulation, price/volume manipulation or insider trading, which cannot be classified as individual investor grievances, could be excluded from the SCORES platform and could be routed via a separate portal for market intelligence.
Regarding the proposed mechanism for dealing with investor grievances, the paper states that SCORES may be redesigned as a platform for individuals/entities to seek timely resolution directly from listed entities. If investors are not satisfied with the solution offered, then they can opt for two levels of scrutiny – the first by a trade body or a tier one regulator such as BSE Administration and Supervision Limited, and the second by Sebi.
Sebi will check and close complaints against SCORES through its reviews. If the investor is still dissatisfied, he/she can choose to settle online or opt for civil remedies.
According to the consultation paper, investors will thus have two interrelated and complementary avenues for redress, one being the SCORES portal and the other being the ODR platform.
“The scope of investor complaints through SCORES is limited by the fact that SEBI has no power to adjudicate rights of third parties, or to grant specific relief or compensation,” the filing said.
“Investors have a wide range of grievances through the ODR, as the arbitrators involved in the process can adjudicate between the parties and make a decision. It also allows the parties to reach an amicable settlement,” it added.
Regarding the need for a separate market intelligence platform, the document states that current complaints on issues such as insider trading or price or volume manipulation will be automatically closed with comments as such complaints require Sebi to check/investigate whether there is any violation of Sebi’s Regulation.
“These types of complaints cannot be considered investor grievances as they require an examination/investigation of the matter. Also, providing any status in these complaints may be price sensitive and have a market impact. Hence, such complaints are considered as market intelligence,” the paper said.
“A separate portal for collection of market intelligence will help to differentiate between investor grievances and intelligence inputs, and focus on each independently,” it added.